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Moody's (MCO)

Company Profile : New York City-based Moody's is a provider of credit ratings, credit and economic related research, data and analytical tools, risk management software and quantitative credit risk measures, credit portfolio management solutions and training services.

Moody's increased its quarterly cash payout by 9.5% to 11.5 cents per share.

The increased dividend will be paid on March 10, 2011 to shareholders of record on Feb. 20. That brings Moody's yield to around 1.8%.

The ratings agency predicts "the most likely 2011 macroeconomic scenario to be a sluggish economic recovery with persistent high unemployment."

As a result, corporations will probably use excess liquidity to entice investors with dividend rewards and juice EPS with stock buybacks. It's a new phase for the earnings "growth" that's been occurring since 2009. Companies have been great at cutting costs through layoffs and other efficiencies, but less great at boosting the top line. Similarly, banks' "reserve releasing" has padded earnings and masked the fact that, for the most part, their fundamental business lines aren't growing.

In early January, Moody's raised its 2010 profit guidance, ahead of its earnings release on Feb. 3, attributing its upward revision to heavy U.S. debt issuance and stronger demand for junk bonds.

Moody's said it now expects full-year revenue to increase 13% year-over-year, compared with its previously announced guidance for high-single to low-double-digit percentage growth. Based on 2009 revenue of $1.8 billion, 2010 revenue is expected to come in at $2 billion, slightly higher than analysts' consensus call for revenue of $1.97 billion.

Moody's said it expects 2010 earnings per share to be in a range of $2.08 to $2.14, up from its prior outlook for EPS of $1.90 to $1.96. Analysts had been looking for full-year EPS of $1.93.

Operating margin is expected to remain in the high 30s percentage range.

"The credit markets are on fire right now, and Moody's is benefiting," Morningstar analyst Michael Corty told Reuters.
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