So far this year, shares of financial data and ratings specialist Moody’s Corporation (MCO) and swimming pool equipment supplier Pool Corp (POOL) have fallen 16% and 11%, respectively. However, an in-depth analysis of the two companies’ fundamentals suggests the market’s pullback may be an overreaction. Both businesses possess highly resilient business models that generate stable cash flow and have a long history of rewarding shareholders with consistently growing dividends. For income-focused investors looking to buy at a low point, these two oversold dividend stocks are worth attention.
Despite a recent 16% decline in its stock price, Moody’s underlying business remains robust. In the fourth quarter of 2025, the company’s revenue increased 13% year-over-year to $1.89 billion. Earnings grew at an even faster pace, with non-GAAP (adjusted) earnings per share (EPS) for the quarter reaching $3.64, compared to $2.62 in the same period last year.
The primary driver of revenue growth was its Moody’s Investors Service segment, which saw revenue climb 17% year-over-year. A robust corporate finance environment, coupled with record fourth-quarter issuance in the infrastructure finance sector, jointly fueled this segment’s strong performance. Meanwhile, the analytics division, which provides recurring subscription revenue, also achieved 9% year-over-year growth. Management stated in the fourth-quarter earnings report that the 2025 results demonstrated robust demand for Moody’s solutions and the company’s precise and efficient execution capabilities.
Furthermore, Moody’s recently raised its dividend by 10%, increasing the quarterly payout to $1.03 per share, marking the 17th consecutive year of dividend increases. Although the current yield of approximately 0.9% may offer limited appeal to yield-seeking investors, the safety and growth prospects of the payout are noteworthy. The company maintains a very conservative payout ratio of around 29%, meaning this financial giant has ample room to support continued future dividend growth while retaining sufficient capital for reinvestment. Following the recent sell-off, Moody’s trades at a price-to-earnings (P/E) ratio of approximately 31 times. For a high-margin compounding business with 20% growth in adjusted EPS for the full year, this valuation remains reasonable.
Unlike Moody’s, Pool Corp is navigating a more challenging macroeconomic environment. This wholesale distributor of swimming pool supplies is grappling with cyclical headwinds, as high interest rates and cautious consumer spending continue to dampen demand for new pool construction. This pressure was evident in the company’s fourth-quarter 2025 results: revenue declined approximately 1% year-over-year to $982.2 million, while EPS fell 13% to $0.85, down from $0.98 in the same period last year.
However, there are positive factors amidst the challenging landscape. The core of Pool Corp’s business relies on non-discretionary maintenance products. Because existing pools require ongoing maintenance regardless of the economic environment, this establishes a baseline for the company’s cash flow. Additionally, the company observed an improvement in sales trends for discretionary products in the second half of 2025.
Even within this cyclical downturn, Pool Corp’s dividend safety remains high. The company has a payout ratio of approximately 45% and consistently prioritizes returning capital to shareholders. Last spring, Pool Corp increased its quarterly dividend by 4% to $1.25 per share, extending its record of consecutive annual dividend increases to 15 years. Currently, the stock offers a dividend yield of around 2.4%. Following an 11% decline in its stock price this year, it trades at a P/E ratio of 19 times. This valuation is attractive given it is based on current earnings depressed by the cyclical downturn. Once the macroeconomic outlook improves and demand for new pool construction rebounds, Pool Corp is well-positioned to accelerate EPS growth once again.
Overall, Moody’s Corporation and Pool Corp are both high-quality businesses whose current stock price weakness appears temporary. Buying these two proven dividend growth stocks on the dip could prove to be a prudent move over the long term.
