According to a new report this morning, Apple is considering a stock split that could add the company to the Dow Jones Industrial Average. Sanford C. Bernstein & Co predicts that Apple’s decision to issue its first dividend in 17 years to shareholders makes now a perfect time for the stock split.
Apple is currently in the NASDAQ index, but given the incredible financial success the Cupertino company has seen over the past decade, it makes perfect sense to move to the Dow Jones.
Bloomberg Businessweek reports:
Apple’s decision in March to pay its first dividend in 17 years makes it more likely the stock could be added to the index after a split, said Toni Sacconaghi, an analyst at Bernstein who rates the shares outperform, in a report today.
“We see the timing as ripe,” Sacconaghi said. “Apple’s initiation of a dividend brings the company in line with all other Dow components. We note that Apple is currently the only company above $215 billion in market cap that pays a dividend and is not included in the Dow.”
A stock split usually happens when a board of directors (in this case Apple’s) observes that the company’s stock has risen too high when compared with the rest of the competing sector. The underlying value of Apple would not change, but AAPL would become more affordable for new investors. Given Apple’s hold on the consumer market, this kind of a move makes total sense.
Moving to The Dow Jones Industrial Average is just a natural thing for Apple to do at this point. As the best known market index for the biggest and most established companies on earth (IBM, ExxonMobil, Chevron, McDonalds, etc.), moving to the Dow would take Apple out of the professional investor, tech startup atmosphere of the NASDAQ and make it even more of a household name. If Apple does indeed move to the Dow Jones, AAPL would be weighted by share-price instead of overall market cap.
During its Q3 earnings call, Apple announced a cash dividend of $2.65 per share for investors that will be payed out on August 16th, 2012.
Source: Bloomberg Businessweek
Alex Heath is a journalist who works for Tech Insider. He’s the former co-host of The CultCast. He has been quoted by the likes of the BBC, KRON 4 News, and books like “ICONIC: A Photographic Tribute to Apple Innovation.” He lives in Lexington, Kentucky. If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Follow him on Twitter.
5 responses to “Apple Considering AAPL Stock Split, Would Join The Dow Jones [Report]”
I believe you are conflating the Dow Jones Industrial Average (a numeric index tracking the performance of the large-cap US stock market) with the New York Stock Exchange (where shares are actually traded). There is no requirement that Apple leave NASDAQ to be included in the DJIA (e.g. Microsoft, Intel, Cisco).
You can’t “move” to the Dow Jones. It’s not an exchange. Nor does the split have any connection with being included. How dumb.
What will be the effect on the AAPL stock price/value? (If you have some in your possession)
The headline says “Apple Considering” but the rest of the article only refers to speculation by a Bernstein analyst. Which is it?