Split off from Motorola Inc. in 2011, Motorola Solutions (MSI) provides communications services to government and police agencies, large enterprises, and wireless infrastructure service providers, explains Harry Domash, editor of Dividend Detective.

Its products include two-way radios, and other voice and data communications products and systems. However, as is the case for so many other sectors, public safety communications systems requirements are rapidly evolving. 

Instead of operating stand-alone communications systems, the federal government will soon require public safety agencies to be interconnected via its FirstNet broadband network, and Motorola Solutions intends to be a major player.

To help implement its strategy to become the leading emergency systems software provider, Motorola acquired Airwave, a U.K.-based systems supplier in 2016, and video surveillance and analytics provider Avigilon in 2018. 

Motorola has already made significant progress in that transformation. Essentially recording zero revenue growth from its 2011 spinoff through 2016, Motorola’s recorded 13 percent year-over-year revenue growth in its September 2018 quarter. Earnings for that quarter came in at $1.94 per share, $0.22 above analyst forecasts and up 27 percent from September 2017. MSI also raised its December quarter forecasts.

But those growth numbers could even get better. Here’s why. Taking a closer look at September’s revenue numbers, sales of traditional products such a mobile radios and video surveillance cameras rose 10 percent to $1.3 billion, but communication software and networks sales soared 22 percent to $570 million. Thus, the overall revenue growth rate will likely increase as communications becomes a bigger piece of the pie.

Motorola is currently paying a 1.9 percent dividend yield and has been growing its payout at least 10 percent annually. Despite the down market, Motorola Solutions shareholders enjoyed a 26 percent total return (share price appreciation pus dividends) in 2018. Analysts are only forecasting 7 percent EPS growth for 2019, so there’s plenty of upside potential here.

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