Stock Market Plummet! Undervalued Dividend Stock Analysis w/ a ~5% Yield!

The new Delta Variant of COVID-19 is causing an uproar in the markets.  The long-term treasuries plummeted below 1.2% for the first time in forever.  The S&P 500 dropped below 4,300 (thankfully) and this has opened up a few opportunities for dividend investors!

Given that, it’s time to dive it at what I think is a solid undervalued dividend stock!

The stock market

In order to really show you what happened on Monday, look at the S&P 500 chart:

Though the stock market dropped on July 19th, we have to remember one thing.  The S&P 500 started the year at 3,748.75 and is still up over 500 points since the start of the year, an up swing of 14%!  Therefore, this just shows the excitement of when the stock market shows red – this just doesn’t happen too often!

In addition, there’s been much volatility, as the inflation rate triggered in at 5.4%, the economy is a little confusing, we aren’t even 50% fully vaccinated yet and the child care payments have now gone out this month.

However, over at our YouTube page, we are pumping out videos on dividend investing, the dividend increases (which are BACK by the way) and other dividend stocks to buy.  Definitely check out our page to familiarize more of the stocks on the radar recently.

Though I have my Vanguard (VYM) strategy, that has now amassed over $29,500+, it’s still the passion to find an undervalued dividend stock out there in the market place.  Therefore, it’s time.  What stock did I find?

LyondellBasell (LYB) is the undervalued dividend stock to buy!

LyondellBasell (LYB) dividend stock analysis

LyondellBasell (LYB) is a beast in the chemical/specialty chemical space.  Going up against DOW, DuPont, and BASF.

Now it’s about that time to run them through the Dividend Diplomats Stock Screener!

Dividend Diplomat Stock Screener

If you don’t know already, we keep the stock screener metrics to THREE SIMPLE items.  They are:

  1. Price to Earnings Ratio – We look for a price to earnings ratio < than the overall Stock Market.
  2. Payout Ratio – We aim for a payout ratio between of less than 60%.
  3. Dividend Growth – We like to see history of dividend growth in a company.

See our Dividend Diplomat Stock Screener page for my details on why this screener identified undervalued dividend stocks!

    1. Price to Earnings Ratio: At a share price of $92.29, close of 7/19/21 the analysts are projecting $15.79 in earnings per share for 2021.  Therefore, the P/E ratio, which helps determine under/over valuation, calculates to 5.84.  This compares favorable to the S&P 500, which is trading at 40x+ earnings.  40x earnings is insanely high rate now, hence why investing into undervalued dividend stocks is tougher and tougher.  The forward p/e ratio for the S&P 500 is around 21-22x+, as well.  Even if the projected earnings was HALF, LYB would STILL be undervalued!  Here is evidence for the projected earnings:
    2. Payout Ratio: LyondellBasell (LYB) pays out $1.13 per quarter or $4.52 in dividends per year.  At a projected earnings of $15.79, the dividend payout ratio is 29%.  LYB’s dividend payout ratio is so low – which means a few items for dividend investors.  First, there is much safety to the dividend, with low risk of being cut.  Second, there is ample room to grow the dividend.  Lastly, it shows LYB reinvests the earnings back into the business, in order to grow earnings – which ultimately helps dividend growth!
    3. Dividend Growth: LyondellBasell (LYB) has grown their dividend at least 7 years, but I would argue it’s closer to 10 years.  The dividend growth rate of LYB is over 6% and their last increase stood strong at 7.6%!
    4. *BONUS* Dividend Yield: At a payout of $4.52 per year with a stock price of $92.29, the dividend yield is 4.90%!  Definitely higher than my dividend portfolio yield, on average, as well as more than 3x the S&P 500!

I am sure, based on the dividend metrics above, it leaves no question that LyondellBasell (LYB) is an undervalued dividend stock right now!

LYB is down over $26 since their 52-week high or 22%.  The stock market dropping this past Monday, also pushed down LYB’s stock price, as well.

Now, let’s hope the stock market continues the correction this week and keeps the price low, for us dividend investors!  Let’s be honest, finding undervalued dividend stocks doesn’t come easy – especially one such as LYB with a great combination of dividend yield AND dividend growth!

LyondellBasell (LYB) dividend stock conclusion

There we have it!  Finally, a nice undervalued dividend stock to buy in this highly priced stock market.  LyondellBasell (LYB) passes ALL THREE dividend stock metrics above AND they are crushing it with the dividend yield nearing 5%.

What is not to like?  In fact, that is what I’ll ask YOU, the reader, what don’t you like about LYB?  They have also paid down over $1B of their long-term debt recently and are improving their liquidity.  Are you buying this dividend stock now?

If you think this is a great undervalued dividend stock to buy, right now, let me know in the feedback below.

I would love to add 3-5 shares of LYB at current price levels, so long as they stay under $95.  However, as a disclaimer – definitely perform your own research and to make your own investment decision; I am simply telling you my plans!  Thank you, had to leave the disclaimer.

If you have other questions/comments, please leave them below.  Appreciate the stop by, and – as always, good luck and happy investing!

-Lanny

7 thoughts on “Stock Market Plummet! Undervalued Dividend Stock Analysis w/ a ~5% Yield!

  1. I was tied up with work and missed Monday’s buying opportunity. However, my weekly M1 Finance deposit happens every Tuesday and noticed 10% of my investment went to buying LYB. Considering I have more than 50 stocks in that portfolio the M1 algorithm must of have picked up a significant drop to allocate that much of my weekly investment. Never a complaint with something yielding almost 5% 🙂

  2. Hi Dividend Diplomats,

    Great post!
    Shouldn’t the text “SpartanNash” read “LyondellBasell” throughout?

    Just a heads up.

  3. I was so surprised that the Delta variant actually caused the market to crash that one day. Investors came to their senses and scooped up stocks to record highs just days after.

    Didn’t investors learn that a prolonged lockdown actually helps the economy, not hurts it? lol

  4. Hi… I am new to this stock market and I am really don’t know all about the best ways to analyse this market. So, this really helps me to understand the latest stock market strategies. Thanks for sharing!

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