Why ON Semiconductor and LyondellBasell Shares Dropped
The uptrend that began in April for ON Semiconductor (ON) ended on Monday. After the company posted second-quarter results, investors reacted poorly. They also expected more from the outlook.
ON posted revenue of $1.47 billion and EPS of $0.53. It met expectations. CEO El-Khoury said, "We are beginning to see signs of stabilization across our end markets, and we remain well-positioned to benefit from a market recovery.”
Stock markets are priced for better results, and traders are now taking profits.
ON’s CEO said that the auto sector shows signs of stabilizing after hitting a bottom in the quarter. Uncertainties remain, so customers are cautious.
Chemical firm LyondellBasell Industries (LYB) closed at $50.90, down by 4.72% on Monday. The $1.37 quarterly dividend yields over 10%. Just as markets anticipated Canada’s BCE (BCE) to cut its dividend, it lacks confidence in LYB’s dividend.
LYB is a shareholder-friendly firm. It prefers to reward its shareholders with a generous high payout ratio. Instead of raising its dividend, LYB might buy back shares aggressively. That would signal substantial confidence in the company’s dividend safety.
If LyondellBasell continues its dividend rate, it could save the excess cash flow to cushion an economic downturn ahead. The firm could buy back more shares, should prices continue to fall.
