The effect of birefringence and dichroism in materials for magneto‐optic memory applications is analyzed. The optical constants of MnAlGe and MnGaGe have been measured. The birefringence and dichroism are approximately equal and are an order of magnitude larger than the magneto‐optic effect. A statistical analysis of the effect of orientation and grain size on noise due to optical anisotropy is also carried out.