Last update on 2024-06-28

MSCI (MSCI) - Dividend Analysis (Final Score: 5/8)

Analyze MSCI's dividend performance and stability using an 8-criteria scoring system. Discover insights on yield, growth, payout ratios, and more.

Short Analysis - Dividend Score: 5

We're running MSCI (MSCI) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

MSCI (MSCI) has been analyzed based on 8 criteria to evaluate its dividend policy. The company scored 5 out of 8. Here's a breakdown: 1. **Dividend Yield:** MSCI's yield is lower than the industry average (0.9759% vs. 2.13%), indicating a focus on capital growth rather than income. 2. **Dividend Growth Rate:** MSCI has a strong average growth rate of 26.91% since 2015, showing robust financial health. 3. **Payout Ratio:** An average payout ratio of 17.05% over 20 years indicates conservative and sustainable payments. 4. **Dividend Coverage by Earnings:** EPS growth from $0.1358 in 2003 to $14.4546 in 2023 indicates well-covered dividends. 5. **Dividend Coverage by Cash Flow:** Improved ratios since 2013 show strong cash flow and dividend sustainability. 6. **Stable Dividends:** No significant drops; growing from $0.18 in 2014 to $5.52 in 2023, showing stability. 7. **Consistency in Dividend Payments:** MSCI has been paying dividends for just under 10 years, short of the 25-year benchmark. 8. **Stock Repurchases:** General upward trend in stock buybacks, particularly in the last decade, showing active management of capital structure.

Insights for Value Investors Seeking Stable Income

MSCI shows strengths in dividend growth, payout sustainability, and consistent stock buybacks, but it lacks a long history of dividend payments and has a lower yield compared to the industry. This makes it less ideal for income-focused investors seeking immediate returns. However, for those looking at long-term growth and stable, growing dividends, MSCI appears strong and financially sound. It could be a worthwhile consideration for a diversified portfolio aimed at capital appreciation and future dividend income growth.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield is the ratio of dividends paid per share to the stock price per share. It's a critical indicator for investors looking for income from their investment.

MSCI's current dividend yield of 0.9759% is significantly lower than the industry average of 2.13%. Over the past 20 years, MSCI's dividend yield has generally trended below the industry average. The stock price has also seen a substantial increase, rising from $38.4 in 2007 to $565.65 in 2023. This indicates that MSCI might be focusing more on capital growth rather than providing immediate income to shareholders. For income-focused investors, this trend might be viewed negatively as they would be receiving a lower yield compared to other industry players.

Average annual Growth Rate higher than 5% in the last 20 years?

The Dividend Growth Rate indicates how much a company's dividend payments have increased over time. A rate higher than 5% is a sign of solid financial health and consistent profit growth.

From 2003 to 2012, MSCI (MSCI) did not pay any dividends, with the first significant dividend arriving in 2015 at 344.4444. Upon adjusting for outliers, the average dividend growth rate from 2015 to 2023 is roughly 26.91%. Although there's volatility, the dividend growth consistently remains high, showcasing MSCI's robust financial health and commitment to returning value to shareholders. This trend is excellent for investor confidence.

Average annual Payout Ratio lower than 65% in the last 20 years?

Investigating the payout ratio over the past 20 years is crucial as it provides insight into the firm's dividend payment sustainability. Generally, a consistently lower payout ratio suggests better retention of earnings for growth and lower risk of dividend cuts.

With an average payout ratio of 17.05% over the last two decades, MSCI Inc. showcases an exceptionally conservative approach toward dividend payouts. Specifically, in the recent decade (2013-2023), payout ratios vary from 7.39% to 42.48%, all comfortably below the 65% threshold. This data indicates that MSCI has sufficient earnings retained for business reinvestment and growth, which is a positive trend for long-term sustainability.

Dividends Well Covered by Earnings?

The criterion examines if the company's earnings per share (EPS) sufficiently cover its dividend per share (DPS). It ensures payout sustainability.

MSCI's EPS has consistently grown from $0.1358 in 2003 to $14.4546 in 2023. Simultaneously, DPS has increased from $0 in 2003 to $5.52 in 2023. The ratio of dividends covered by earnings started from zero and reached 0.3819 in 2023, which means earnings exponentially cover the dividends. This trend is healthy—MSCI is capable of sustaining dividend payouts while retaining earnings for growth.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow mean that a company generates sufficient free cash flow to cover its dividend payments. This is important as it shows sustainability and reduces the risk of future dividend cuts.

Examining MSCI's free cash flow and dividend payout from 2003 to 2023, we see that coverage ratios have significantly improved. Initially, the tallied dividend in 2006 showed poor coverage (0.06), but since 2013, the trend has become progressively stable, reaching a more comfortable ratio of 0.39 by 2023. The improvement is indicative of better cash flow generation and foresight in dividend distribution, marking a positive and growth-driven trend for dividend sustainability.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, which ensures that the dividend per share does not drop by more than 20% over 20 years, is crucial for investors looking for consistent income.

Based on MSCI's dividend data over the past 20 years, we see a clear upward trajectory starting from 2014 when the company initiated regular dividends. The data shows significant growth without any notable drops, and there hasn't been a decrease of over 20% as indicated by your records. This suggests strong and stable financial health, making MSCI an attractive option for dividend-focused investors. The dividends grew from $0.18 per share in 2014 to $5.52 per share in 2023, representing substantial growth. Even in challenging economic conditions, MSCI has maintained or increased its dividend payments, reflecting robust earnings and a commitment to returning capital to shareholders. Hence, MSCI displays good stability in dividend payments.

Dividends Paid for Over 25 Years?

Consistency in dividend payments over an extended period shows stability and commitment to returning value to shareholders. This often signals good financial health and investor confidence.

MSCI has been consistently paying dividends since 2014, which is just under 10 years. While the consistent upward trend in dividend value is a positive indicator of the company's performance and intentions to reward shareholders, it falls short of the 25-year threshold. This means MSCI needs more history to be seen as incredibly stable in this criterion. Nonetheless, the growth in dividends—from 0.18 in 2014 to 5.52 in 2023—demonstrates a strong trend.

Reliable Stock Repurchases Over the Past 20 Years?

Evaluate whether the company has consistently repurchased its shares over the past 20 years and discuss why this is significant.

MSCI has seen a general trend of share repurchases over the past 20 years, with significant buybacks occurring in 11 of those years, especially in the last decade. For example, between 2016 and 2023, MSCI repurchased shares consistently every year. This trend indicates a strong commitment to returning value to shareholders, as buybacks reduce the number of outstanding shares, thereby increasing earnings per share (EPS) and potentially boosting the stock price. The average repurchase rate of 0.7361 suggests that the company is actively managing its capital structure, which is generally seen as a positive sign by investors. However, the relatively lower number of shares repurchased in several early years indicates that this was not a consistent strategy throughout its entire history, but rather a more recent focus. Overall, the pattern is positive.