Last update on 2024-06-27

Motorola Solutions (MSI) - Dividend Analysis (Final Score: 5/8)

Analyze Motorola Solutions (MSI) dividend performance and stability using an 8-criteria scoring system. Discover insights on dividend yield, growth, coverage, and more.

Short Analysis - Dividend Score: 5

We're running Motorola Solutions (MSI) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield represents the dividend income per share, relative to the share price. It is an important metric in deciding if a company is a good income investment, indicating the company’s capability to provide income.

Motorola Solutions (MSI) has a dividend yield of 1.1562%, slightly lower than the industry average of 1.19%. Historically, MSI’s yield has fluctuated but remained competitive. However, the current yield being lower than average may indicate limited attractiveness for income-focused investors. Despite an increasing dividend per share from 2011 onwards, the surge in stock price has muted the yield. A yield below the industry average coupled with a robust stock price (from $50.65 in 2003 to $313.09 in 2023) could still be seen positively if investors prioritize capital gains over income.

Average annual Growth Rate higher than 5% in the last 20 years?

Dividend Growth Rate measures the annualized percentage rate of growth of a company’s dividend payments. A growth rate higher than 5% is generally considered strong and suggests financial health.

Analyzing the given dividend per share (DPS) ratios from 2003 to 2023, Motorola Solutions (MSI) has demonstrated substantial fluctuations in dividend growth. The hesitancy in 2008 and 2009, likely influenced by broader economic crises, saw negative values, which are concerning. However, these seem offset by significant spikes in other years, particularly 2012 and 2005. The overall average of 9.29%, significantly surpassing the 5% benchmark, suggests robust growth, even considering high volatility. This trend is positive, demonstrating MSI's capability to recover and maintain consistent shareholder returns amidst economic fluctuations.

Average annual Payout Ratio lower than 65% in the last 20 years?

average payout ratio

To interpret whether Motorola Solutions' (MSI) average payout ratio is lower than 65% in the last 20 years, we need to calculate the average of the given payout ratios from 2003 to 2023. A payout ratio below 65% generally indicates that the company retains a substantial proportion of its profits for growth and reinvestment. Moreover, it highlights the sustainability of future dividend payments, which is crucial for dividend investors.

Dividends Well Covered by Earnings?

Explain the criterion for Motorola Solutions (MSI) and why it is important to consider

One crucial criterion is whether dividends are well covered by earnings. Ensuring that a company's earnings per share (EPS) adequately cover the dividend per share (DPS) serves as a key measure of financial stability and sustainability. A well-covered dividend implies that the company has sufficient profits to support its payout, thus reducing the risk of dividend cuts and signaling financial health to investors.

Dividends Well Covered by Cash Flow?

Analyzing whether dividends are well covered by free cash flow helps determine if a company maintains sustainable dividend payouts without compromising its financial stability.

For Motorola Solutions (MSI), the Free Cash Flow (FCF) coverage of dividends has varied significantly over the past 21 years. Here are the yearly coverage percentages: 2003: 17.58% 2004: 14.70% 2005: 9.80% 2006: 15.54% 2007: 255.74% 2008: -172.90% (Negative FCF) 2009: 32.20% 2010: 0% (No dividend payout) 2011: 10.47% 2012: 30.58% 2013: 38.78% 2014: -41.25% (Negative FCF) 2015: 33.37% 2016: 31.32% 2017: 27.44% 2018: 38.38% 2019: 24.06% 2020: 31.23% 2021: 30.24% 2022: 33.82% 2023: 32.89% The years 2008 and 2014 showed challenging conditions with negative free cash flow. However, recent years exhibit stronger coverage hovering around 30-38%. While these numbers show some potential for maintaining dividends, a lower historical coverage ratio might pose risks during periods of financial instability. MSI shareholders might find added confidence from the current trend, particularly compared to the volatile earlier years. Overall, Motorola Solutions appears to be in a better position to cover dividends via free cash flow in recent times, though the investor should monitor any recurring negative FCF closely.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over the past 20 years are crucial for income-seeking investors as it reflects the company's consistent ability to generate enough profit to return value to shareholders. A drop of more than 20% can indicate financial instability or poor management decisions.

Motorola Solutions (MSI) has demonstrated robust dividend stability over the past two decades. The company faced a challenging period from 2009 to 2011, where no dividends were paid, which could indicate financial difficulties or a strategic decision to conserve cash. Despite this, from 2012 onwards, MSI has consistently increased its dividends, showcasing resilience and strong financial health. The dividend has grown from $0.44 per share in 2011 to $3.62 per share in 2023, indicating a compound annual growth rate (CAGR) of approximately 20%. This trend reflects a strong commitment to returning value to shareholders, making MSI an attractive investment for income-focused investors. The absence of a 20% drop in any given year further underscores the company's stability and reliable performance.

Dividends Paid for Over 25 Years?

Evaluation of Motorola Solutions (MSI) concerning its record of paying dividends for over 25 years helps investors ascertain the company's consistency and reliability in returning value to shareholders. Companies with a long history of regular dividend payments are often viewed as financially stable, have steady earnings, and manage their profits prudently to reward shareholders continuously. It's a critical parameter to gauge the reliability of prospective dividend income.

Motorola Solutions (MSI) displays an inconsistent dividend distribution pattern over the past 25 years. Between 2008 and 2009, dividends were suspended, and the company also seems to have halted dividends from 2009 to 2011, finally resuming at a lower value in 2011 (0.44). Despite subsequent increases each year, this disruption highlights instability. Consistent dividend payments were observed from 1998 to 2008 and post-2011 indicating financial repercussions likely squeezed payout capacity. Moreover, maintaining and growing dividends in spite of market fluctuations post-2011 reflects resilience but the interruptions shadow a complete reliability score that dividend-seeking investors might catch onto.

Reliable Stock Repurchases Over the Past 20 Years?

Reliability in a company's stock repurchase program signifies financial health, strong cash flow generation, and commitment to enhancing shareholder value. Repurchasing shares not only averts potential dilution but can also be a signal of management's confidence in the company's future performance. A consistent buyback strategy can lead to a more favorable valuation and improve shareholder returns over the long term.

Motorola Solutions (MSI) has displayed a trend of reducing its outstanding shares from 335.9 million in 2003 to 167 million in 2023. By repurchasing shares across multiple years, especially during 2006-2008, 2012-2017, and 2019-2023, the company has demonstrated its commitment to boosting shareholder value. The average annual reduction rate in shares is approximately -3.2133%. This steady decrease in outstanding shares indicates a reliable and consistent stock repurchase program, showcasing MSI's strong cash flow management and reaf firming confidence in the company's growth prospects and valuation. Overall, this is a positive trend for existing shareholders as it underlines financial prudence and strategic use of capital over a prolonged period. Continual buyback as observed, provides potential for higher earnings per share (EPS) growth and can foster positive investor sentiments.