Updated 3/11/25
MSCI Inc. is a global leader in investment decision support tools, best known for its indices, analytics, and risk management solutions. The company provides crucial data that helps asset managers, hedge funds, and institutional investors navigate the markets. While MSCI is often viewed as a growth stock, it has also developed into a solid dividend payer, making it an interesting option for long-term investors seeking a blend of capital appreciation and income.
For those focused on dividends, MSCI might not be the highest-yielding stock out there, but its consistent dividend growth and strong financials make it a compelling choice. Let’s break down what dividend investors should know.
Key Dividend Metrics
📈 Forward Dividend Yield: 1.32%
💰 Annual Dividend Rate: $7.20
🔄 5-Year Average Dividend Yield: 0.89%
📆 Most Recent Dividend Date: February 28, 2025
🚨 Ex-Dividend Date: February 14, 2025
📊 Payout Ratio: 45.55%
Dividend Overview
MSCI has steadily grown its dividend over the years, reflecting its commitment to returning cash to shareholders. While a 1.32% yield isn’t particularly high, it is a noticeable improvement over its five-year average of 0.89%. This suggests that management has been actively increasing payouts at a faster pace than the stock price appreciation, a positive sign for income investors.
The company’s dividend policy balances payouts with reinvestment, ensuring it has the financial flexibility to fuel future growth. This makes it attractive to investors who prefer a rising stream of income rather than just a high upfront yield.
Dividend Growth and Safety
One of the strongest aspects of MSCI’s dividend is its steady and reliable growth. The company has consistently raised its dividend, demonstrating confidence in its earnings power and cash flow generation.
With a payout ratio of 45.55%, MSCI retains more than half of its earnings, allowing for both dividend expansion and reinvestment in the business. This level is considered healthy, as it provides a cushion against economic downturns while maintaining dividend growth potential.
Cash flow is another key factor in dividend safety. MSCI generates $1.5 billion in operating cash flow and $1.11 billion in levered free cash flow, more than enough to cover dividend payments. This strong cash generation reduces the risk of a dividend cut, even in challenging economic conditions.
The main point of concern is MSCI’s debt load. With $4.66 billion in total debt and a relatively low cash balance of $405.85 million, the company operates with a high level of leverage. While this hasn’t impacted dividend payments so far, it’s something to monitor, especially if interest rates stay elevated for an extended period.
Chart Analysis
The MSCI chart provides a clear view of the stock’s recent price action, moving averages, and momentum indicators. There’s been a notable shift in trend dynamics, which investors should take into account.
Moving Averages and Trend Shifts
The 50-day moving average (orange line) has recently crossed below the 200-day moving average (blue line), a bearish technical signal known as the “death cross.” This typically indicates a potential shift to a downtrend, or at least a period of consolidation after a strong rally.
Looking at price action, the stock previously experienced a strong upward trend throughout much of the past year, peaking above $600 before retreating. Now, it has broken below both the 50-day and 200-day moving averages, suggesting weakening momentum. This breakdown often means investors are reassessing the stock’s valuation or adjusting expectations based on broader market conditions.
Volume and Selling Pressure
Volume in recent sessions has been relatively steady, though a few spikes suggest moments of heavier selling. When a stock trades below key moving averages with increasing volume, it can signal stronger downside conviction from sellers.
That being said, the absence of extreme volume spikes suggests this isn’t a panic-driven decline, but rather a measured pullback. If volume increases significantly on down days, it could confirm further downside risk.
Relative Strength Index (RSI) and Momentum
The RSI, a common momentum indicator, appears to be trending downward, currently hovering near the lower half of its range. This suggests declining buying pressure and an increase in bearish sentiment. However, RSI hasn’t yet entered oversold territory, which means there may still be room for further downside before the stock becomes technically attractive for short-term buyers.
If RSI drops below 30, it would indicate an oversold condition, which could bring in bargain hunters looking for a potential rebound. But until then, the stock remains in a neutral-to-bearish zone from a momentum perspective.
Key Price Levels to Watch
Support and resistance levels are critical in assessing where the stock might head next. Right now, $537 appears to be an area of price interaction, but if selling continues, the next support level could be closer to $500. On the upside, a recovery above the 200-day moving average would be a sign of renewed strength, potentially attracting buyers back into the stock.
Given the recent break below key moving averages and weakening momentum, investors may want to see stabilization before expecting a reversal. Watching how the stock behaves around these levels in the coming sessions could provide valuable clues about its next move.
Analyst Ratings
MSCI Inc. has recently seen a mix of analyst upgrades and downgrades, reflecting differing opinions on the stock’s outlook. The consensus price target among analysts currently stands at approximately 📈 $663.40, suggesting potential upside from its current levels.
Upgrades
📊 Goldman Sachs upgraded MSCI on December 18, 2024, moving the rating from neutral to buy and raising the price target to 💵 $723. The decision was based on expectations of stronger earnings growth, largely due to increasing adoption of artificial intelligence in financial services, which could lead to greater demand for MSCI’s products.
📈 Wolfe Research issued an upgrade on December 12, 2024, shifting MSCI’s rating from peer perform to outperform, with a price target of 💰 $700. The research firm highlighted MSCI’s dominant market position and the anticipated rise in demand for its index and analytics services as key reasons for the bullish stance.
Downgrades
📉 Raymond James downgraded MSCI on January 5, 2024, lowering the rating from outperform to market perform. Analysts pointed to concerns over valuation, suggesting that the stock’s recent price appreciation may have outpaced its short-term earnings potential.
⚠️ UBS followed suit on March 25, 2024, adjusting MSCI’s rating from buy to neutral. Their decision was based on concerns regarding the company’s high valuation multiples and potential macroeconomic headwinds that could impact the broader financial services sector.
With a mix of bullish and cautious views, analysts seem to agree that MSCI has long-term potential but faces near-term valuation concerns. Investors may want to weigh these factors carefully before making any decisions.
Earning Report Summary
MSCI just wrapped up its latest earnings report, and there’s plenty to unpack. The company saw steady revenue growth, solid demand for its services, and some strong areas of expansion, but there were also a few headwinds worth noting. Let’s break it down.
How the Quarter Played Out
Revenue came in at $743.5 million, up 7.7% from the same time last year. That growth was mostly fueled by subscription services and higher fees from asset-based products. With more investors relying on MSCI’s indices and analytics, it’s no surprise the company is seeing a steady rise in demand.
Earnings per share landed at $4.18, which was a nice beat over the $3.96 that analysts had predicted. However, net income for the quarter took a hit compared to last year, dropping to $305.5 million from $403.4 million. The decline isn’t as bad as it seems on the surface—last year’s numbers were boosted by a one-time $143 million gain, making this year’s results look a little weaker in comparison.
Operating expenses increased by about 5.9%, mainly because MSCI has been expanding its workforce. More employees mean higher compensation costs, but that investment in talent could pay off in the long run.
Looking at the Full Year
For all of 2024, MSCI pulled in $2.86 billion in revenue, keeping its growth trend intact. Cash flow remained strong, with $1.5 billion in operating cash flow and $1.11 billion in free cash flow, showing the company’s ability to generate steady income.
One of the most notable highlights was the surge in the index segment, which benefited from major cash inflows into equity ETFs tied to MSCI’s indices—over $48 billion flowed in during the last quarter alone. Meanwhile, the analytics division had a record-breaking year, with more clients sticking with their services than ever before.
Sustainable investing also played a role in MSCI’s success. More investors are looking for ESG and climate-related investment tools, and MSCI is well-positioned to benefit from that shift.
What’s Next?
MSCI has been innovating and expanding its offerings, particularly in data and technology. The company also continued rewarding shareholders, repurchasing $810 million worth of stock over the year.
Overall, while there were some bumps along the way—like rising costs and tougher year-over-year comparisons—MSCI’s earnings showed strong demand for its products, steady growth, and a clear path forward.
Financial Health and Stability
MSCI has a strong profitability profile, with margins that reflect the company’s ability to maintain pricing power and operational efficiency.
- Profit Margin: 38.83%
- Operating Margin: 54.20%
- Return on Assets: 17.49%
These figures show that MSCI converts a significant portion of its revenue into profits, which is critical for maintaining a strong dividend policy. The high operating margin indicates that the company has a well-structured cost base, allowing it to generate consistent earnings even in volatile market conditions.
However, the balance sheet presents a few challenges. With a current ratio of 0.85, MSCI has limited short-term liquidity. The total debt level is also notable, sitting at $4.66 billion. While cash flow generation helps manage this, it could become a concern if economic conditions deteriorate.
Valuation and Stock Performance
MSCI has never been a cheap stock, and that remains true today.
- Trailing P/E: 38.81
- Forward P/E: 32.15
- PEG Ratio: 2.46
- Price/Sales Ratio: 15.08
The high P/E ratio indicates that investors are willing to pay a premium for MSCI’s earnings growth. The PEG ratio above 2 suggests that the stock might be slightly overvalued relative to its growth potential. This has been the case for years, though, and long-term shareholders have been rewarded with strong returns.
Looking at recent stock performance:
- 52-Week High: $642.45
- 52-Week Low: $439.95
- Current Price: $541.72
- 200-Day Moving Average: $563.89
MSCI has pulled back from its highs, which could present an opportunity for investors looking to enter at a slightly lower price. The stock is trading below its 200-day moving average, a sign that momentum has cooled. However, for dividend investors focused on long-term income growth rather than short-term price movements, this isn’t necessarily a red flag.
Risks and Considerations
- High Valuation – MSCI trades at a premium, and if earnings growth slows, the stock could see a valuation reset.
- Debt Levels – With over $4.6 billion in debt and a relatively low cash balance, leverage remains a factor to watch.
- Market Cyclicality – MSCI’s business is tied to institutional investment flows, which can decline during economic downturns.
- Modest Dividend Yield – While dividend growth is strong, the yield itself remains relatively low.
- Stock Volatility – A beta of 1.19 suggests MSCI experiences slightly higher volatility than the broader market.
Final Thoughts
MSCI may not be the first stock that comes to mind for income investors, but its growing dividend and strong profitability make it a solid long-term hold. The payout ratio is at a comfortable level, and the company generates strong cash flows, supporting continued dividend growth.
The stock isn’t cheap, and its debt levels should be monitored, but for those focused on total returns rather than just yield, MSCI offers an attractive combination of capital appreciation and dividend reliability.
While it might not suit investors seeking immediate high income, those with a long-term perspective looking for dividend growth could find it an interesting addition to their portfolios.
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