Apple (AAPL) Stock Split Rumors Gain Traction

Apple (AAPL) Stock Split Rumors Gain Traction

According to reports, Apple Inc. (NASDAQ:AAPL) may be considering an option to go for a stock split, which could result in it getting added to Dow Jones Industrial Average. Apple Inc. (NASDAQ:AAPL) is currently listed on NASDAQ, but with unprecedented financial success and announcement to pay its first dividend in 17 years along with the split, makes it eligible for the coveted index. Apple announced a cash dividend of $2.65 per share during its Q3 earnings call, to be payed on August 16th, 2012.

In an article published in Bloomberg today, An analyst from Sanford C. Bernstein & Co told “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,” he added “We see the timing as ripe, Apple’s initiation of a dividend brings the company in line with all other Dow components. We note that Apple Inc. (NASDAQ:AAPL) is currently the only company above $215 billion in market cap that pays a dividend and is not included in the Dow.”

What could have provoked the management to go for split is, Apple’s stock has increased too much, when compared with the other players in the industry. So to make the stock more affordable for the new investors, the company could favor such a move. A stock split does not change underlying value of the company.

It will be the right move for the Cupertino based company, to move to the coveted Dow Jones Industrial Average, whose list of companies include the biggies like International Business Machines Corp. (NYSE:IBM), Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and McDonald’s Corporation (NYSE:MCD), etc. The last change or reshuffle to Dow Jones membership was seen in June 2009, when Cisco and Travelers Cos. replaced General Motors Corp., which at that time had filed for bankruptcy protection.

There have been talks before that Apple and Google Inc (NASDAQ:GOOG) might be included in the Dow. If this happens, they will enjoy the biggest weightings in the index, as the stocks are ranked by stock price in Dow Jones. And both Apple and Google have been trading above $600, three times more than that of IBM (NYSE:IBM), which currently has the largest weight in the index.