Is MSCI a Compelling Dividend Growth Play Amid Strong Earnings Momentum?

MSCI Inc. (MSCI) has long been a favorite among income-focused investors, but its recent performance raises a critical question: Is it still a compelling dividend growth play in 2025? With a 10-year annualized dividend growth rate of 33.76%, a payout ratio of 45.68%, and robust earnings expansion, the company appears to offer a rare combination of sustainability and momentum. Let's dissect the numbers to determine whether MSCI remains a top-tier choice for long-term investors.

Sustainable Dividend Growth: A Decade of Compounding

MSCI's dividend growth trajectory is nothing short of impressive. Over the past decade, the company has compounded its dividend at an average rate of 33.76%, accelerating to 20.30% over the past five years. This momentum continued in 2025, with a 12.5% increase to $1.80 per share, marking the ninth consecutive year of raises. Such consistency is rare in the market and reflects MSCI's confidence in its cash flow generation and strategic reinvestment.

The key to sustaining this growth lies in MSCI's payout ratio. For Q2 2025, the company distributed $139.3 million in dividends, representing a 45.8% payout of its $303.7 million net income. This aligns with the broader 45.68% payout ratio cited in recent reports, which is well below the 100% threshold that signals overleveraging. A cash payout ratio of 41% further underscores the company's ability to retain capital for reinvestment while rewarding shareholders.

Earnings Expansion: A Foundation for Future Growth

MSCI's earnings per share (EPS) growth has been equally compelling. From 2020 to 2023, the company delivered double-digit annual growth, with 2023's 34.04% surge to $14.45 EPS being a standout. While 2024 saw a 2.49% dip to $14.09, the first half of 2025 has already reversed the trend. For Q2 2025, EPS hit $3.92, a 16.32% year-over-year increase, and the twelve-month trailing EPS as of June 30, 2025, stood at $15.13—a 1.07% rise from 2024.

This resilience is driven by MSCI's strategic focus on high-growth areas. Its expansion into private assets, ESG (environmental, social, and governance) analytics, and climate risk modeling has unlocked new revenue streams. For instance, the company's ESG solutions now account for over 20% of its revenue, a figure expected to grow as global regulations tighten.

The Case for Long-Term Investors

For income-focused investors, MSCI's combination of a low payout ratio and accelerating earnings growth is particularly attractive. A 45.68% payout ratio ensures the company can maintain dividend growth even during economic downturns, while its 16.32% quarterly EPS surge in Q2 2025 signals strong momentum. Additionally, MSCI's balance sheet remains robust, with a debt-to-equity ratio of 0.35 and a cash reserve of $2.1 billion as of Q2 2025.

However, risks exist. The company's exposure to global markets means it could face headwinds from geopolitical tensions or regulatory shifts. That said, its diversified client base—spanning asset managers, corporations, and governments—mitigates sector-specific risks.

Final Verdict: A Buy for Patient Investors

MSCI's dividend growth story is underpinned by a sustainable payout ratio, accelerating earnings, and a forward-looking business model. While the 2024 dip in EPS was a minor setback, the company's Q2 2025 performance and strategic investments in ESG and private assets position it for long-term success. For investors seeking a high-conviction dividend growth play, MSCI offers a compelling mix of income security and capital appreciation potential.

In conclusion, MSCI remains a top-tier choice for long-term income investors. Its ability to balance shareholder returns with reinvestment, coupled with its leadership in the net-zero transition, makes it a standout in the data and analytics sector. As the world increasingly demands transparency in sustainability and risk management, MSCI is well-positioned to deliver both earnings and dividend growth for years to come.