OK, My Turn

[Dividend Watcher]

fiveoh, HRS seems to be under the radar a lot. At these prices, I'd just let it sit and compound if it weren't over where I want it in the portfolio. Doesn't help that the yield is so low nowadays.

HRS makes great products. I think its biggest competitor is RTN. Both have secure communications equipment lines but that's been HRS specialty for years. I also think, despite most of their sales being to government, that their products are also widely represented in the first responder fields so income is not tied totally to defense spending. If they can transition their IT networking division, which seems to mainly support our troops in the field, to the civilian world a la IBM & Accenture, they'll steady their revenue stream.

Their net income fluctuates, sometimes wildly, as they write off R&D and I think their growth rate is going to slow to the mid-single digits until the next defense buildup. LT debt is higher than I want but they can cover it with cash flow. At about 40% payout ratio, they have lots of room to grow the dividend and they are very shareholder friendly.

That's my off-the-cuff opinion. I'm comfortable holding it but wouldn't buy more right now. Wait for a low-teens P/E ex-special items, at best, for a purchase.