Show Stock Splits Stock splits most oCt often en occur occur occur oc oc- oc- oc cur in times of rising market prices good corporate earnings earnings earnings earn earn- ings reports and a strong overall business climate TIns THIS iS S clearly illustrated by the large number of stocks that were split during the 1968 1965 period In those years prices and earnings were generally rising rising ris ris- ris ing and business for the most part was exceptionally good IN TIlE THE forepart of 1969 stock split activity continued heavy as the year prop progressed and the economy slowed so too Ico did stock split activity Fewer In 70 Corporate earnings and general general gen gen- eral business conditions are not likely to be robust this year If the past gives any clue clur to the future then it would appear that 1970 may not be a particularly good goodyear goodyear goodyear year for stock splits MOREOVER the great bulk of stocks may not experience sharp price rises which might logically be followed by a split Nevertheless there are bound to be a certain number of stocks that will split-some split unexpectedly perhaps-just perhaps as there are bound to be some logical split candidates that will take no such action Why Split The primary reasons behind a corporate decision to split its stock are to increase the number of shares available and to lower the price of such shares Both of these factors should improve the marketability marketability marketability market market- ability of a company's shares and result in a broader ownership ownership own own- base THE SMALLER investor generally generally gen gen- shuns the priced higher-priced issues since he quite often oCten will be unable to buy round lots and is unwilling to buy odd lots because of the cost differential A stock split eliminates this hurdle and allows a large number of investors investors in in- to participate in company company company com com- pany ownership Finding Candidates The most popular price level for stocks in recent years appears appears appears ap ap- ap- ap pears to have been between 30 and 50 per share MORE INVESTORS have purchased meaningful numbers numbers num num- bers of shares in this range than at higher prices Therefore good grade is issues issues is is- sues selling at from 80 to per share or higher are usually viewed as split candidates BUT THERE have also been many instances when stocks in the 50 to 79 range have been split The split ratio will not necessarily be for 2 but may be at any multiple or percentage Almost always as a company company company com com- pany splits its stock it will increase the dividend on the new shares Anticipation of this is usually the reason for a in price upon the announcement announcement announcement an an- of a stock split |