Mailbag: Stock Update Edition

I recently received two separate emails that asked for updates on specific stocks I have mentioned here in Dividend Digest.

First up, let’s look at LyondellBasell (LYB).

It’s one of the world’s largest producers of polymers and a leader in polyolefin technologies. These are the materials used in plastics, synthetic fibers, and adhesives. Think food packaging, nylon, epoxy, and PVC pipes.

LYB is focused on circular and low carbon solutions with the goal of reducing plastic waste by using recycled and renewable materials as feedstock. It also licenses technology to other companies.

I first started following the stock back in 2022 after going down a research rabbit hole about the future of plastics. LYB is positioned for a leadership spot in that future. However, 2024 and 2025 were not good years for its share price.

The stock was down 42% in 2025 due to a combination of factors. One was weak demand for durable goods. LYB’s CEO called it the longest and deepest downturn of his career. Another was shifts in the global petrochemical markets.

As market conditions worsened, the company updated its 2022 three-pillar strategic plan and added a cash improvement plan. Progress was being made, but it wasn’t enough to offset the challenges. Investors were sure that a dividend cut was needed.

The dividend was halved on February 20. This can often be a fatal blow for dividend payers, but for LYB, the move ramped up share price recovery. A lower dividend gives management more money to use for strategic change and sustainable future growth. Share price momentum has continued even higher with oil prices.

High-priced oil favors LYB because around 70% of its production runs on ethane that’s extracted from natural gas. Its competitors use naphtha which is distilled from crude oil. That’s a competitive advantage for LYB in 2026.

All that said, I still like LYB as a future leader in plastics. Our yield has dropped due to the dividend cut, but I’m positive management will start increasing the payments as soon as its feasible. You need to buy shares for under $78.85 to collect my minimum 3.5% target.

What’s Going on With BDCs?

The other stock I’m asked about a lot is Hercules Capital (HTGC). It’s still one of my favorite stocks, but the market doesn’t agree with me right now.

Shares have been in free fall. This slide isn’t unique to just HTGC, it is hitting the entire BDC sector.

Remember, BDC stands for business development company. BDCs invest in small- or medium-sized businesses or financially distressed companies. In addition to a monetary investment, they must also provide management or operational support. The rub here is that many BDCs, Hercules included, invest heavily in the technology sector.

The current fear is that AI and its ability to code will take over the entire SAAS (software-as-a-service) industry and then some. The disruption to the software space will be so vast that small- and medium-sized tech companies will just drop like flies… or at least that’s the fear. BDCs will be stuck writing off their investments as junk.

It doesn’t help that BDCs have already been struggling for the past 18 months.

Prepayments have surpassed new originations, resulting in smaller portfolios and lower NAV (net asset value). This shows the portfolios are contracting. And overall, BDCs generally trade close to their NAV. I still think we will see this imbalance start to level out by the end of the year.

Looking at Hercules, I’m not concerned about the quality of its portfolio. In 2025, the company had another year of record operating performance and originations, and record total investment income and net investment income. Prepayments and NAV showed improvements into the fourth quarter.

Hercules currently pays out $0.47 per quarter—a $0.40 base distribution and a $0.07 supplemental. That’s a 13.3% yield at recent prices. Even if HTGC has to cut its supplemental distribution, the yield is still 11.3%. I’m still adding to my position.

Take Advantage of Price Movements

When my favorite products go on sale, I’ll buy a few extra. The best time to buy something you’re going to inevitably use is when prices are the lowest. That’s also the best time to invest. In a perfect world, we’d buy all our positions at the bottom.

Our brains try to tell us to do the opposite.

As the market goes up, investors get excited and can easily overcommit capital to the markets. As the market goes down, investors can get cold feet and keep more money in cash. The end result is buying at a high price and selling low.

There are two steps I take before I panic sell. Depending on the answers, you can determine if you should buy more shares instead!

First, always go back to the original investment thesis. Why did you buy the shares in the first place? I still believe that LYB and HTGC are clear leaders in their respective sectors. And that there will be demand for both for many years to come.

Second, check to see if something has changed with the company. LYB was being hit back-to-back with challenges. It needed a strategic plan with clear progress forward. That included the cost savings of cutting the dividend. We also have shifting macro winds that are sending some advantages in LYB’s direction. HTGC was seeing its NAV drop. When we dig further, we see prepayments starting to reverse as originations continue to hit records.

If you’re comfortable with your answers continue to hold your shares. And if your answers get you really excited about the positions again—buy more. Every time you can grab shares at a lower price, and the dividend stays steady, you lock in a higher yield. That’s important for dividend investors like us who want to hold our positions for years or even decades.

For more income, now and in the future,

Kelly Green