3 Companies With Frequent Stock Splits and Why It Matters for Your Portfolio | Global News Avenue

Home Depot (HD),McDonald’s(MCD) and Comcast (CMCSA) is one of the companies that performs the most stock splits.

one stock split Is a corporate action that increases the number of outstanding shares of a company by dividing each existing share into two or more. The result is a lower share price but the same effect Market valueand the total holding value of each shareholder remains unchanged.

Here, we take a look at some well-known companies that have undergone multiple stock splits.

Home Depot has frequently spun off in the years since it went public. In less than two decades, it has split 13 times. The frequency of spinoffs, especially in the 1980s and 1990s, reflects Home Depot’s dramatic growth as it expanded its retail presence across the United States while sowing the seeds of the housing boom.

• December 1999: Three for two
• June 1998: Two split into one
• June 1997: Three for two
• March 1993: Four for three
• June 1992: Three for two
• June 1991: Three for two
• June 1990: Three for two
• June 1989: Three for two
• September 1987: Three for two
• June 1983: Two to one
• November 1982: Two to one
• April 1982: 5-4 split
• January 1982: Three for two

The original shares purchased before the first split in 1982 have grown to approximately 342 shares.

Since going public in 1965, the global fast-food giant has conducted 12 stock splits:

• February 1999: Two to one
• June 1994: Two split into one
• June 1989: Two to one
• June 1987: Three for two
• June 1986: Three for two
• September 1984: Three for two
• September 1982: Three for two
• May 1972: Two to one
• May 1971: Three for two
• May 1969: Two to one
• May 1968: Two to one
• March 1966: Three for two

If investors had purchased one share of MCD before the first recorded split in March 1966, the number would have increased to approximately 648 shares. This extensive history of spin-offs is a testament to the company’s long-term growth.

Media and telecoms conglomerate Comcast has also gone through 12 spinoffs during its tenure:

• February 2017: 2-in-1 split
• February 2007: Three for two
• May 1999: Two-in-one split
• February 1994: Three for two
• October 1989: Three for two
• April 1988: Three for two
• December 1986: Three for two
• June 1985: Three for two
• September 1984: Three for two
• January 1983: Three for two
• April 1981: Three for two
• May 1980: Three for two

Frequent spinoffs, especially in the 1980s and 1990s, reflected Comcast’s significant growth as it expanded its cable television and media businesses. The original shares purchased before the first split in 1980 have grown to approximately 231 shares.

What a stock split means for your investment portfolio

The primary benefit of a stock split is improved affordability. By lowering the price per share, splits make a company’s shares more accessible to a wider range of investors who may have previously been priced out of the market. This allows more people to participate in the company’s growth. The split should lead to improvements Liquidity Trading volume is higher because more investors can buy and sell shares at a lower price.

For companies, higher liquidity can lead to greater efficiency price discovery and its stock market is more stable. For investors, improved liquidity means they can more easily enter or exit stock positions as needed.

Stock splits can also have a psychological impact on investors. Many people view stock splits as a positive sign for a company’s prospects, as the decision to split a stock is typically made when company management believes the company is performing well and has the potential for continued growth. This can boost investor confidence and generate positive sentiment towards the stock. However, a stock split does not fundamentally change the fundamental value of the company or its stock.

There are also some disadvantages. One downside could be increased short-term volatility, as more frequent trading and larger price swings may occur as investors adjust to the new price structure. Still, stock splits are generally considered positive, and stock prices often get a temporary boost.

bottom line

The decision to split a stock depends on a variety of factors, such as the company’s stock price, growth prospects and overall market conditions. While stock splits can make shares more accessible to a wider range of investors, they do not fundamentally change a company’s value or its underlying financial condition.

Investors should view stock splits as part of a company’s overall financial strategy and in conjunction with other key metrics such as earnings growth, incomeand cash flow.