We have one company that never ceases to surprise us. Not only is it very important to investors around the world, its results and dividend policy suggest that we can look forward to a significant dividend increase this year.

The company, which focuses on financial services and the creation of investment indices, has seen significant growth and stability, making it an attractive target for investors. Its influence on global markets is significant and the investment indices it provides are widely used. The company's ability to innovate and steadily generate income makes it an attractive investment opportunity with recognition from investors around the world.

Which company is it?

MSCI $MSCI, a Morgan Stanley Capital International company, specializes in providing financial services and creating global investment indices. Its core business is tracking and analyzing financial markets around the world. MSCI is known for its research analysis and for providing data to help investment professionals make decisions.

One of the main reasons why MSCI is interesting is its impact on the global financial markets. Its investment indices are used by investors around the world as benchmarks to evaluate portfolio performance and measure market trends. MSCI also provides various tools and services for risk management and investment optimisation.

Another factor that makes MSCI attractive is its ability to innovate and adapt to market changes. The company regularly updates its indices and develops new products to better serve the needs of investors. Its analysis and forecasts are often considered an important source of information for investors when making investment decisions.

About MSCI

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Clientele

• Asset Managers
• Asset Owners
• Banks
• Corporations
• Hedge funds
• Insurance companies
• Asset managers

Quarterly results

MSCI stock jumped 10% to more than $608 per share after the company released its fourth quarter and year-end results.

MSCI was on a roll in the fourth quarter, helped by several strong months in the equity markets in November and December. The company's operating income rose 20% year-over-year to $690 million, while operating margin rose one basis point to a stellar 53.7%.

MSCI's net income climbed 88% year-over-year to $403.4 million, or $5.07 per share. The company's results were driven by higher sales and a one-time gain of $97.1 million related to last year's acquisition of Burgiss Group, a private equity data and analytics provider. For the full year, MSCI's net income rose 32% to $1.15 billion, or $14.39 per share.

MSCI also posted fourth-quarter revenue growth in all areas. It generally makes money in two ways: through subscriptions to its products and tools and through fees related to its assets.

Overall, MSCI's asset-based fees rose 15.9% to $145 million. Recurring subscription revenue rose 16.8% to $505 million, while one-off subscription fees jumped 114% year-on-year to $40 million.

In the fourth quarter, revenue from new recurring subscriptions increased 1.9% to $92.2 million, while total net revenue, including cancellations and one-time subscriptions, jumped 25% to $103.3 million.

Where is the revenue coming from?

Thecompany's revenue flows through four main business lines: indices, analytics, ESG (environmental, social and governance) and climate and private assets. The indices segment is the largest of these four segments with revenues of $388 million, up 17.8% from the same quarter a year ago. It is followed by analytics with $165 million, up 10%, followed by ESG with $76 million, up 20%, and private assets with revenues of $61 million, up 81%.

A good dividend stock

MSCI is an excellent dividend stock due to its high operating margins and high free cash flow, which comes from steady streams of underwriting income. In the fourth quarter, the company had free cash flow of $367 million, up 24% year-over-year. For the full year, it had free cash flow of $1.145 billion, up 12% from the prior year.

A dividend increase of up to 16%?

For fiscal year 2024, MSCI projects free cash flow of $1.225 billion to $1.228 billion, a potential increase of 7%. As a result, the company was able to increase its first-quarter dividend by approximately 16% to $1.60 per share. The latter was paid on Thursday, February 29. It also represents an annual dividend of $6.40 and a dividend yield of 1.16%.

In addition, speculation of a dividend increase was fueled by the company's CEO himself. For 2024, the company's CEO said that they are committed to returning excess capital to shareholders through share buybacks and dividend increases.

The company's recent steps for future growth

1. Cboe Global Markets (CBOE) announced a new strategic initiative with MSCI (MSCI) to expand its suite of options on the Cboe-MSCI index and volatility indices. This initiative underscores the deepening relationship between Cboe and MSCI and continues to leverage the combined expertise of both companies to develop innovative solutions for investors around the world.

2. US financial services company MSCI has signed an agreement to acquire UK-based Trove Research, a respected data, analytics and advisory firm specialising in carbon markets, in a move aimed at expanding its portfolio of climate solutions.

Since its founding in 2015, Trove Research has gained international recognition for its expertise in carbon markets, driven by deep industry knowledge coupled with proprietary data and advanced models.

3 MSCI announced it will acquire the remaining 66% of The Burgiss Group for $697 million in cash. Given that MSCI already had a stake in the firm, the decision to buy the company outright is not a major surprise. The growth of private markets is a big theme across the industry, and MSCI's decision to acquire Burgiss is a bet that the need for data and analytics from private markets will continue to grow.

4. MSCI has agreed to acquire Foxberry, a London-based provider of index technology for investors, for an undisclosed sum.

Founded in 2014, Foxberry develops and provides investment solutions driven by its foxf9 technology, a platform designed to address complex index construction and risk modelling applications. The platform focuses on index and strategy construction through hypercustomisation, extensive backtesting and simulation capabilities, sustainability criteria and reporting.

What do analysts expect?

Based on 13 Wall Street analysts who have offered 12-month price targets for MSCI over the past 3 months. The average target price is $623.36 with a high forecast of $700.00 and a low forecast of $470.00. The average target price represents a change of 13.26% from the last price of $550.39.

For example, such Morgan Stanley upgraded shares of MSCI from an "equal weight" rating to an "overweight" rating and raised the company's target price from $526.00 to $600.00 in a research report.