In this work, a compact finite-difference time-domain (FDTD) algorithm with a memory-reduced technique is proposed for the dispersion analysis of rectangular waveguides either fully or partially loaded with longitudinally-magnetized ferrite. In this algorithm, the divergence theorem is used to eliminate the longitudinal components of the electric and magnetic flux densities. The mobius transform (MT) technique is applied for the first time to obtain the equations relating the magnetic field to the magnetic flux density in a ferrite medium. Some examples are presented to validate the obtained algorithm with numerical results: good agreement is obtained with a significant reduction in the memory space requirement compared to the conventional algorithm.