The only reason a stock splits is to make the stock more affordable for a wider audience. Many people shy away from Berkshire Hathaway, Google, the Washington Post and other high priced stocks due to sticker shock. A smaller audience due to sticker shock lessens a stocks gains. Simple economics.
If a stock selling at $100, earning $6 per share and paying a $3 annual dividend splits 2-for-1, you end up with twice as many shares selling at $50, earning $3 and paying a $1.50 dividend. I fail to see any difference whatsoever. Your investment will still have the same exact value but more shares. Back in the days when commissions were based on 100-share lots, a 2-for-1 split would have more than doubled your cost to sell the stock. What's so great about that? With commissions usually based on a flat rate per trade and the odd-lot differential taken out of the picture, the extra expense caused by a split is no longer a factor. The only people who made money on stock splits were the brokers. Shareholders got screwed but were too stupid to know it. It was the brokers who lobbied for splits simply because splits increased the commissions they could gouge out of their customers. Nowadays, no one benefits from stock splits. They're a total waste of money for everyone unless you're an old-time broker who is still gouging your customers outrageous commissions.
A broker once told me that the time to acquire a stock is before it splits. The only thing a stock split does is to make that stock more affordable in smaller lots to many more people. True, you can buy 50 @ $100 rather than 100 @ $50 and everything is equal. But it is only a perception of more affordability. The people that buy before, get a little bump up. More than the people that buy after the split because many times after the split, the stock settles down rather quickly to a normal slow grind. Only my take on it.
skinz,......I've posted in the past that a split doesn't add much shareholder value. If you have a 10 pound loaf of baloney and cut it in half, you now have 2 five pound loaves of baloney, but, still 10 pounds total. When you have goofy splits like 20% or some other percentages, your bookkeeping becomes more difficult to maintain. I once owned Taiwan Semi and they used to do splits annually which were then taxed by the Taiwanese government,...not good. Berkshire Hathaway has never split, they also have never paid a dividend. Yogi Berra is alleged to have ordered a pizza and was asked how many pieces to have it cut into, 6 or 8, his response was , Cut it into 6 pieces, I can't eat 8 pieces.......Kid
I have been expecting a split since it was holding 110 - 115. I think the Board meets around the beginning of May. They will probably consider it at that time. I agree most investors are more likely to buy a stock at 60 rather than 120.
dog,....I'll buy more at $60,but not at $120.
Funny how my mind works.
Arghh.................I just had an home energy audit done, it was $99. I told the guy, $99. seems a lot less than $100. We did punch through $120. today.....Kid
Considering the $120 breakthrough was late in the day, I'll be positive.
As to the split, all things in due time. Bumping the dividend is the precursor to the split; I'm more interested in the payout. Airborne's got his new car, Kid; are you graduating to Sam Adams?