Stock splits are still surprisingly rare — but S&P 500 investors applaud when they happen. So it’s only natural to guess which high-priced stocks might split next.
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Ten stocks in the S&P 1500 trade for nosebleed per-share prices of more than $1,000 a share, including consumer discretionary NVR (NVR), Amazon.com (AMZN) and Chipotle Mexican Grill (CMG), says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. And eight of those $1,000-plus stocks are in the S&P 500.
There’s no guarantee any will split. And stock splits don’t make any financial difference to the value investors’ holdings. But it turns out, investors love splits.
Information technology giant and Leaderboard member Nvidia (NVDA) reminded S&P 500 investors what they’re missing on May 21. The computer-chip maker announced plans for a 4-for-1 stock split. Investors celebrated — sending the stock up 2.6% to 599.67 — as the news came just days ahead of the company’s quarterly profit release.
And it’s just the latest example.
Stock Splits Shrivel Up
Splits are much more rare than they were a decade ago
| Year | # of S&P 500 splits | # of S&P 1500 splits |
|---|---|---|
| YTD | 3 | 9 |
| 2020 | 7 | 18 |
| 2019 | 4 | 14 |
| 2018 | 5 | 18 |
| 2017 | 6 | 24 |
| 2016 | 11 | 24 |
| 2015 | 16 | 31 |
| 2014 | 12 | 41 |
| 2013 | 16 | 48 |
| 2012 | 18 | 39 |
Sources: IBD, S&P Global Market Intelligence
S&P 500 Investors Rejoice Rare Splits
Stock splits are practically unicorns on Wall Street. And that’s a surprise — as per-share stock prices are double from a year ago.
Just nine S&P 1500 companies announced splits this year so far, roughly in line with the 18 in all of 2020. And just three S&P 500 stocks split this year. That’s only on pace with last year. Splits are a fraction of where they were in 2013. That year, 48 S&P 1500 stocks split their shares.
Not seeing splits is surprising, too. Stock prices are up considerably from this point last year. S&P 1500 stocks now have a median per share price of 62.50. That’s up more than 60% from the median per-share price of 37.29 a year ago. Meanwhile, roughly a third of the stocks in the S&P 1500 trade for 100 a share or more.
And splits remain popular with investors.
Shares of the nine S&P 1500 stocks to split this year are up 12% since the split. That’s well above the 7.3% average return of the S&P 500 during the same time. Take paint maker Sherwin-Williams (SHW) as an example in the S&P 500. Its shares are up more than 15% since it announced a 3-for-1 split on April 1. That tops the 4.7% gain in the S&P 500 in that time.
Historically, companies split their share prices when they start moving toward 100 a share. Following a split, the per-share stock price falls, but investors get additional shares. The value of the company is unchanged, but a lower per-share price is theoretically more affordable. Splits, though, can make options contracts more affordable.
Hooray For Splits
S&P 1500 stocks that split this year are outperforming
| Company | Symbol | Index Constituents [Primary Listing] | % ch. since split | S&P 500 % ch. since split | Split completed |
|---|---|---|---|---|---|
| Amphenol | (APH) | S&P 500 | 10.5% | 10.2% | 3/5/2021 |
| Dime Community Bancshares | (DCOM) | S&P 600 | 45.1% | 12.1% | 2/1/2021 |
| Hawkins | (HWKN) | S&P 600 | 2.3% | 6.5% | 3/2/2021 |
| Life Storage | (LSI) | S&P 400 | 18.2% | 10.8% | 1/28/2021 |
| M.D.C. | (MDC) | S&P 600 | 4.3% | 6.5% | 3/2/2021 |
| National Beverage | (FIZZ) | S&P 600 | -8.7% | 6.4% | 2/22/2021 |
| SL Green Realty | (SLG) | S&P 400 | 19.6% | 8.1% | 1/21/2021 |
| Sherwin-Williams | (SHW) | S&P 500 | 15.1% | 4.7% | 4/1/2021 |
| Nvidia* | (NVDA) | S&P 500 | 2.6% | -0.1% | 5/21/2021 |
| Average | 12.1% | 7.3% |
Sources: IBD, S&P Global Market Intelligence, * – split announced, not completed
Looking At S&P 500 High-Priced Stocks
Warren Buffett, a long-time critic of stock splits (and Bitcoin), continues to tip the scale on the S&P 1500 when it comes to high-priced stock. But he’s far from alone.
His Berkshire Hathaway class A shares trade for more than 432,000 a share. That more than any other stock. In fact, the per-share price is so unusually high, it threatened to short-circuit the Nasdaq’s pricing and trade reporting system. But pressure isn’t on the company to split as the company’s class B shares trade for a much more palatable 287.92 each.
But there’s no shortage of other high-priced stocks. Homebuilder NVR closed Friday at 4,655.22 a share. That’s the highest per-share price outside of Berkshire. But high per-share prices are also common with a number of high technology stocks. Amazon.com closed at 3,203.08 a share on Friday. And then there’s Google parent, Alphabet, which closed at 2,293.38 a share.
The question, though, is will more companies follow? There’s plenty of room to do it.
S&P 1500 Stocks With The Highest Per-Share Prices
| Company | Ticker | Index | Close on May 21 | % stock YTD ch. | Sector |
|---|---|---|---|---|---|
| Berkshire Hathaway | (BRKA) | S&P 500 | 432,469.04 | 24.3% | Financials |
| NVR | (NVR) | S&P 500 | 4,655.22 | 14.1% | Consumer Discretionary |
| Amazon.com | (AMZN) | S&P 500 | 3,203.08 | -1.7% | Consumer Discretionary |
| Alphabet | (GOOGL) | S&P 500 | 2,294.13 | 30.9% | Communication Services |
| Booking Holdings | (BKNG) | S&P 500 | 2,293.38 | 3.0% | Consumer Discretionary |
| Cable One | (CABO) | S&P 400 | 1,772.34 | -20.4% | Communication Services |
| AutoZone | (AZO) | S&P 500 | 1,460.26 | 23.2% | Consumer Discretionary |
| Chipotle Mexican Grill | (CMG) | S&P 500 | 1,330 | -4.1% | Consumer Discretionary |
| Mettler-Toledo | (MTD) | S&P 500 | 1,276.29 | 12.0% | Health Care |
| Boston Beer | (SAM) | S&P 400 | 1,045.39 | 5.1% | Consumer Staples |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
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