Wednesday, August 1, 2012

Apple Inc (AAPL) May Go For a Stock Split

As far as the reports go, Apple Inc. (NASDAQ:AAPL) may be thinking of going for a stock split. This could lead to its getting added to Dow Jones Industrial Average. Apple is on the NASDAQ list currently. However, with its exceptional financial success and declaration of paying its first dividend in 17 years may make it qualified for the popular index.

Apple has declared a dividend amount of $2.65 per share to be paid on 16th August 2012.

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An analyst from Sanford C. Bernstein & Co. made a statement in an article in Bloomberg that Apple’s decision to pay its first dividend in 17 years makes situations favorable for it to be added to the index after a split. The timing seems to be apt. Apple’s endeavor to initiate the dividend brings it in line with all other components of Dow. The analyst also mentioned that Apple is currently the only company that is placed above $215 billion in market cap that pays dividend, yet is not a part of Dow.

It is likely that as Apple’s stock has increased way too much as compared to the others in the market, the management felt it right to go for a split. In order to make the stock affordable for new investors, Apple could favor such a move. A stock split would not alter the fundamental value of the company.

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It will be an ideal move for the company based in Cupertino to move to Dow Jones Industrial Average that enlists bigwigs like McDonalds Corporation, Chevron Corporation and Exxon Mobil Corporation. June 2009 was the last time when Dow Jones membership was reshuffled when General Motors Corp. was replaced by Cisco and Travelers Cos.

There are speculations that Google Inc. will be included in Dow. If that happens, Google and Apple would be the biggest weightings in the index as stocks are listed by stock prices in Dow Jones. As Apple and Google both have been trading above $600, that is 3 times IBM (NYSE:IBM), the largest weight in the index currently. 

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