Apple Inc. (AAPL), AutoZone, Inc. (AZO): Should These Companies Split Their Shares?

Splitting the company’s shares would allow for more retail shareholders to own the name, as well as a more liquid and available options market. At $400+ per share, options three and six months in the future are pricey for retail investors.

A 10 for 1 stock split could bring the company back into the hands of retail investors who want exposure to dividend-paying technology companies. Apple Inc. (NASDAQ:AAPL) trades at multiples near Microsoft Corporation (NASDAQ:MSFT) and Intel Corporation (NASDAQ:INTC), and at a nearly-equal dividend yield. Slashing the share price with a stock split could encourage retail investors in Microsoft and Intel to make a move over to Apple.

A final world on stock splits

Stock splits do not change the underlying value of the business, but they can encourage the market to find a more appropriate value for the stock. AutoZone, Inc. (NYSE:AZO) and Apple have high share prices which can constrain liquidity and participation. If at any point a select group of investors are priced out of the market, the stock doesn’t get the demand it deserves, which can crimp valuations.

Autozone and Apple are excellent candidates for a stock split. Autozone could encourage more liquidity and institutional participation while Apple could tap into retail dividend focused investors to create more shareholder value.

The article Should These Companies Split Their Shares? originally appeared on Fool.com and is written by Jordan Wathen.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, and Microsoft. Jordan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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