DOWDow Inc.

Dow produces basic chemicals — ethylene and polyethylene, the raw material of almost all plastic packaging.

This is an undifferentiated commodity: one producer's polyethylene is no better than another's, and price is set by the global balance of demand and capacity. Hence severe cyclicality — years of high margins give way to years when a plant runs at nearly nothing, and the company cannot influence that.

The advantage comes from feedstock: American plants run on cheap shale gas, while European and Asian ones use more expensive oil-based feed. That cost gap is the main asset. The flip side is a wave of new capacity in China and the Middle East pressing prices down. The dividend is high, and its sustainability in a trough becomes a question in itself.