Motorola Solutions (MSI): 2019 Top Picks' Mid-Year Update

07/22/2019 5:00 am EST

Focus: TECHNOLOGY

Harry Domash

Publisher, DividendDetective and Winning Investing

Harry Domash, income specialist and editor of Dividend Detective, selected Motorola Solutions (MSI) as his favorite speculation for 2019. The stock rose 45% in the first half of the year. Here's his latest update on this tech services firm.

In 2011, Motorola, Inc. spun-off its supposedly slow growth businesses into Motorola Solutions. The firm provides communications services to government and police agencies, large enterprises, and wireless infrastructure service providers.

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 achieve that goal, Motorola has made some key acquisitions, acquiring Airwave, a U.K.-based systems supplier in 2016, and video surveillance and analytics provider Avigilon in 2018.

So far this year, Motorola acquired Avtec, a maker of dispatching communications systems utilizing Internet and other broadband networks, and VaaS International Holdings which offers data and image analytical systems that provide vehicle location data to law enforcement agencies. 

Motorola revenues were stuck in the $6.0 billion range from 2012 though 2017. Then, last year Motorola’s acquisitions and other moves began to pay off and revenues jumped 15% to $7.3 billion.

That trend is continuing. March quarter earnings rose 16% on 13% higher sales. But, analysts weren’t impressed. They’re only forecasting 8% EPS and 7% sales growth for all of 2019.

Thus, there’s still plenty of opportunity for upside surprises, which, of course, would drive share prices higher. Thanks to it rising share price, Motorola’s dividend yield has shrunk to 1.4%. But Motorola typically announces 10% to 20% dividend hikes in November.

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