The board of Moody's Corporation (NYSE:MCO) has announced that it will be paying its dividend of $0.77 on the 17th of March, an increased payment from last year's comparable dividend. This takes the annual payment to 0.9% of the current stock price, which unfortunately is below what the industry is paying.
Check out our latest analysis for Moody's
Moody's' Dividend Is Well Covered By Earnings
If it is predictable over a long period, even low dividend yields can be attractive. However, Moody's' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 62.2% over the next year. If the dividend continues on this path, the payout ratio could be 26% by next year, which we think can be pretty sustainable going forward.
Moody's Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.64 in 2013 to the most recent total annual payment of $3.08. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
Moody's Could Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Moody's has impressed us by growing EPS at 7.4% per year over the past five years. Moody's definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Moody's Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Moody's is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for Moody's (of which 1 doesn't sit too well with us!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NYSE:MCO
Solid track record with adequate balance sheet.
