Fewer companies in the Standard & Poor’s 500 index are making split decisions. Instead they are letting their stocks carry bigger price tags.
Only 11 companies have split their stock this year, among them, Colgate-Palmolive and Whole Foods. MasterCard announced plans to split Tuesday. A stock split is when a company increases the number of shares it has outstanding and accordingly lowers the price per share. The price change ensures that the company’s market value remains the same.
Stock splits typically happen when a company’s board believes the share price has risen too high or is trading too far above the shares of similar companies. Although the stock market has climbed 166 percent since March 2009, the number of stock splits during that period has been consistently low and has declined since 2011.
Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices, says executives are increasingly comfortable with higher stock prices. He says several factors have kept splits at a minimum, including the reality that they’re expensive.Associated Press
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