Westlake Corporation (NYSE: WLK) has just announced a remarkable increase in its regular dividend distribution for the second quarter of 2023. The Board of Directors has declared a dividend of 50.00 cents per share, marking a significant 40% increase compared to the 35.70 cents per share paid out in the first quarter of the same year.

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Enhanced Cash Generative Model

Albert Chao, Westlake's President and CEO, expressed his satisfaction with the decision, attributing the substantial dividend increase to the company's robust cash generative business model. Chao highlighted Westlake's commitment to growth, which has been particularly evident in their investments in differentiated and specialty products within their Performance and Essential Material (PEM) segment. Furthermore, Westlake's leading positions in downstream building products under their Housing and Infrastructure Products (HIP) segment have contributed to a more stable earnings profile.

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Global Low-Cost Advantage

Westlake's strong cash generation throughout the business cycle is also reinforced by their globally advantaged low-cost position. This positioning not only ensures consistent cash flow but also supports the company's capacity for investment across its various business operations. With a conservatively positioned, strong investment-grade balance sheet, Westlake aims to strike a balance between a higher dividend level and the capacity to reinvest for long-term shareholder returns.

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Consistent Dividend History

This announcement marks Westlake's 76th successive quarterly dividend since its initial public offering back in August 2004. This remarkable history of consistent dividend payments reflects the company's commitment to delivering value to its shareholders over the long term.

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Forward-Looking Statements and Risks

While the news of a dividend increase is certainly positive, it's important to acknowledge the risks associated with investments. Westlake Corporation's forward-looking statements highlight that these decisions are not without risks and uncertainties. Factors such as economic conditions, industry cycles, raw material availability and costs, global economic uncertainties, and even pandemic-related concerns can impact actual results. Investors are advised to carefully consider these risk factors when making investment decisions.

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Westlake Corporation's dividend increase announcement underscores its commitment to rewarding shareholders while also focusing on continued growth and investment. The company's strategic decisions, stable earnings profile, and global advantage in cost positioning contribute to its ability to navigate business cycles and deliver value to investors. As the market watches for the dividends' impact, it's essential to remain mindful of the broader economic context and the inherent risks involved in investments.