Updated 6/3/25
Moody’s isn’t your typical dividend stock. It doesn’t lure investors with a high yield, nor does it rely on flashy headlines. Instead, it delivers something far more enduring: consistency. Over the years, Moody’s has carved out a strong, reliable presence in the global financial system. Most people know it for credit ratings, but there’s a lot more going on beneath the surface. Its other business line—Moody’s Analytics—quietly powers financial decision-making through data, software, and risk solutions.
This dual-engine structure has helped Moody’s weather different market conditions. One side benefits from financial market activity, while the other thrives on long-term contracts and recurring revenue. That balance has made Moody’s an underappreciated income generator for long-term investors who value stability and growth.
Recent Events
In its latest earnings release, Moody’s reported results that didn’t rock the boat—but they certainly reassured. Revenue came in with a healthy 7.7% year-over-year growth, while earnings saw a solid 8.3% increase. These numbers reflect an uptick in debt issuance across investment-grade markets, alongside steady momentum in the analytics business.
The real story for dividend investors, though, is the company’s cash position. Moody’s pulled in $2.82 billion in operating cash flow over the past twelve months and finished with $2.18 billion in free cash flow. That kind of firepower keeps the dividend not only safe but comfortably funded, even as the company continues investing for growth.
Key Dividend Metrics
📈 Dividend Yield: 0.78% (Forward)
💸 Payout Ratio: 30.16%
📅 Ex-Dividend Date: May 16, 2025
📆 Dividend Payment Date: June 6, 2025
📊 5-Year Average Dividend Yield: 0.80%
💰 Forward Annual Dividend Rate: $3.76 per share
🔁 Dividend Growth: Consistent double-digit increases for over a decade
This isn’t a stock for chasing high yields. It’s for those who understand the value of growing income and financial discipline.
Dividend Overview
Moody’s current dividend yield sits below 1%, which might look underwhelming at first glance. But the yield doesn’t tell the whole story. Moody’s has a long track record of steadily raising its dividend while maintaining a conservative payout ratio. That 30% range gives it plenty of flexibility. The company isn’t stretching to make dividend payments—it’s doing so easily, with a margin of safety.
When you look deeper, the quality of the dividend becomes clear. It’s backed by strong fundamentals: high margins, reliable cash flow, and disciplined management. Return on equity is above 55%, a number driven by the company’s asset-light model and premium pricing power. That kind of efficiency allows Moody’s to reward shareholders without compromising growth or balance sheet health.
The balance sheet itself holds up well. While total debt stands at $7.27 billion, Moody’s also holds $2.2 billion in cash. With a current ratio of 1.57, there’s no immediate liquidity pressure. It’s clear that management is walking a careful line—leveraging the company’s strengths without exposing it to unnecessary risk.
Dividend Growth and Safety
This is where Moody’s really separates itself. Dividend growth has been consistent and impressive over the years, with low double-digit increases forming a clear pattern. The company has stuck to a payout ratio that leaves room for both growth and resilience.
That growth isn’t just financial—it’s structural. Moody’s Analytics now makes up a significant portion of revenue, providing a predictable, subscription-based income stream. That base helps cushion the business during slower credit cycles and ensures that the dividend remains stable, even when parts of the market get bumpy.
Beyond dividends, Moody’s has also been buying back shares, which enhances value over time. With 13.83% of shares held by insiders and nearly 80% by institutions, there’s strong alignment. Management and major shareholders are clearly committed to long-term returns—not short-term moves.
The company’s use of debt deserves a closer look. While the debt-to-equity ratio is high on paper, it’s important to consider the context. Moody’s doesn’t require a lot of capital to run its business. Its services are high-margin and scalable, meaning it can carry more debt than a capital-heavy business without putting the dividend at risk.
Volatility is something else to keep in mind. The stock has a beta of 1.38, which means it can move a bit more than the market. But over time, that hasn’t translated into instability. Instead, it’s just the price of owning a premium stock that continues to deliver. For long-term investors focused on income and total return, that’s a trade-off worth accepting.
In the end, Moody’s is a case study in how steady businesses can quietly build wealth. The dividend might not be high, but it’s reliable, well-covered, and growing—all supported by a business that’s deeply embedded in the financial world. For income investors with a long-term view, that’s exactly the kind of story worth following.
Cash Flow Statement
Moody’s generated $2.82 billion in operating cash flow over the trailing twelve months, a strong indicator of the company’s core profitability and efficiency. That figure is only slightly below the prior year’s $2.84 billion, showing consistent performance. Free cash flow for the same period came in at $2.5 billion, which reflects the firm’s ability to cover capital expenditures while still producing significant cash for dividends and buybacks. Capital expenditures remained modest at $324 million, consistent with Moody’s asset-light business model.
On the investing side, the company used $736 million, down from over $1 billion the year prior, indicating a more measured pace in acquisitions or long-term investments. Financing activities consumed $2.44 billion, a notable increase year-over-year, driven by aggressive share repurchases and debt repayments. The company repaid $700 million in debt while avoiding any new borrowings this time around. The net result is a solid cash position of $2.12 billion at the end of the period, giving Moody’s continued financial flexibility without needing to rely heavily on external financing.
Analyst Ratings
📊 Analysts have maintained a generally positive outlook on Moody’s Corporation (MCO), with a consensus rating of “Moderate Buy.” 🎯 The average 12-month price target stands at $520.87, suggesting a potential upside of around 9% from where shares are currently trading. Targets range from a low of $456 to a high of $572, highlighting a mix of confidence and caution depending on each firm’s broader market view.
📈 Some analysts have nudged their expectations higher following solid quarterly results and continued strength in Moody’s Analytics. For example, Wolfe Research bumped its price target from $500 to $550 while reaffirming an “Outperform” rating. Their optimism was tied to Moody’s consistent earnings delivery and strong operating leverage, especially in its analytics segment where recurring revenue has become a major stabilizing force.
🔍 On the flip side, a few firms have taken a more conservative stance. Stifel Nicolaus trimmed its price target from $533 to $468, sticking with a “Hold” rating. This wasn’t so much a reflection of Moody’s internal performance, but rather a nod to the broader uncertainty in financial markets and macroeconomic outlook that could weigh on credit issuance volumes.
🧮 All in all, the majority of analysts continue to view Moody’s as a quality name with reliable fundamentals, attractive cash generation, and a solid long-term growth trajectory.
Earning Report Summary
Strong Start to 2025
Moody’s got off to a confident start in 2025, delivering a solid earnings report that reflected strength across both of its main business segments. Total revenue climbed 8% year over year to $1.92 billion, with Moody’s Investors Service (MIS) and Moody’s Analytics (MA) each contributing equally strong growth. MIS posted a record-breaking $1.07 billion in revenue, thanks largely to an increase in corporate and structured finance activity, while MA followed closely with $859 million, supported by steady demand for its risk and compliance tools.
Earnings per share came in at $3.83 on an adjusted basis, which marked a healthy 14% jump compared to the same time last year. Operating margins also moved higher, showing the company’s ability to manage costs while expanding its revenue base. MIS saw its margin hit 66%, while MA came in at 30%, highlighting the efficiency and profitability of both sides of the business.
Segment Highlights
In MIS, the growth came from stronger transactional revenue, particularly in structured finance, which surged 21%. There was also solid momentum in private credit deals. Not everything was up, though—revenue from financial institutions dipped slightly due to a slowdown in issuance from insurance companies. Still, the overall trend pointed to solid market activity and a favorable issuance environment during the quarter.
On the analytics side, MA showed once again why it’s becoming a core engine of Moody’s growth. The recurring revenue model here is incredibly stable, now accounting for 96% of MA’s total. Annualized Recurring Revenue (ARR) reached $3.3 billion, up 9% from a year ago. Retention rates remained high at 93%, with Decision Solutions, Insurance, and Banking all contributing to the ARR growth.
Outlook and Guidance
Despite the strong quarter, Moody’s took a slightly more cautious tone in its full-year guidance. Citing economic uncertainty and the impact of U.S. trade policy dynamics, the company adjusted its expectations for the rest of 2025. The new range for adjusted EPS is $13.25 to $14.00, trimmed from the earlier estimate of $14.00 to $14.50. Revenue is now expected to grow in the mid-single-digit range rather than the high-single-digit pace previously forecasted.
Investments and Capital Return
Operating expenses ticked up by 9% to $1.08 billion, mostly due to higher employee compensation, technology investments, and some restructuring costs tied to a broader operational efficiency program. Moody’s absorbed $33 million in charges related to that effort but kept its financial footing strong, closing the quarter with $2.2 billion in cash.
The company also stayed true to its shareholder-friendly approach. It bought back 0.8 million shares at an average price just under $482 and increased the dividend by 11% to $0.94 per share. That combination of performance, prudence, and capital return continues to underline Moody’s long-term focus and financial discipline.
Management Team
Moody’s Corporation is led by President and CEO Rob Fauber, who stepped into the role in 2021 after over 15 years with the company. His experience spans both Moody’s Investors Service and Moody’s Analytics, giving him a well-rounded view of the business. Since taking the helm, Fauber has focused on accelerating innovation across analytics and maintaining the integrity and global leadership of the company’s credit ratings operation.
Supporting Fauber is Noémie Heuland, the Chief Financial Officer, who plays a key role in Moody’s capital strategy and long-term financial planning. The rest of the executive leadership team brings deep experience in risk management, global markets, and technology. At the board level, Chair Vincent Forlenza adds further strength with his background in global corporate governance. The alignment between leadership and long-term shareholder interests has been clear in how Moody’s balances reinvestment, dividend growth, and share repurchases.
Valuation and Stock Performance
Moody’s stock is currently trading near $482 per share, keeping it within striking distance of its 52-week high. The valuation remains elevated relative to peers, with a trailing P/E ratio of 41.5 and a forward P/E of 34.3. That premium reflects investor confidence in the company’s durable earnings model, strong market position, and consistent track record of execution. Price-to-sales sits at 12.0, and price-to-book is above 23, both indicators of the market’s willingness to pay for quality and stability.
The stock has gained over 18% in the past year, outperforming the broader market. A mix of solid earnings delivery, free cash flow strength, and high-margin business segments have kept sentiment bullish. Analysts following the name generally see room for more upside, with the average 12-month price target sitting around $521. Most analysts remain constructive on Moody’s long-term outlook, pointing to strong recurring revenue in the analytics segment and steady issuance activity as key supports.
Risks and Considerations
Despite the company’s strengths, there are risks that investors should keep in mind. Moody’s is heavily exposed to trends in global debt issuance. If capital markets tighten or economic uncertainty leads to reduced borrowing, it could impact revenue, particularly from Moody’s Investors Service. The reliance on transactional revenue in that segment means that performance can ebb and flow with broader market conditions.
There’s also the ever-present regulatory risk. Credit rating agencies operate under strict oversight, and changes in regulation—whether from the U.S., Europe, or elsewhere—can introduce new compliance burdens or shift industry dynamics. On top of that, while Moody’s has a strong moat, competition from other rating firms and financial data providers is always in the background, especially as analytics and AI become increasingly central to client offerings.
Final Thoughts
Moody’s continues to be a name that stands for stability in a financial landscape that often feels anything but. Its blend of legacy strength and forward-looking analytics capability has helped it remain relevant, even as the tools and expectations of the financial world evolve. With a leadership team that understands the importance of balance—between innovation and tradition, growth and capital return—the company remains well positioned.
The valuation may not come cheap, and macro risks are always part of the equation in this sector. But Moody’s consistent performance, prudent capital strategy, and expanding data and analytics footprint suggest it’s a company built to navigate those challenges effectively. For investors looking for steady cash flow, dividend growth, and a strong business model, Moody’s offers a mix of qualities that continue to appeal.