Will P&G split its stock? It hasn't happened in 15 years
Procter & Gamble's shares arenear an all-time high will the company split the shares for the first time in 15 years?
Traditionally, the Cincinnati-based consumer giant has let its stock price climb above $100 per share, then conducted a 2-for-1 split(issuing two shares for each one outstanding at half the price). The company has done this six times since 1970.
The longest P&G has allowed the stock to remain above $100 before a stock split: 11 months in the late 1990s.How long has P&G's latest foray into triple digits?
Six months,10 days and counting...
Analysts are split over the possibility of a P&G stock split. Company officials won't comment on the matter.
"Total returns (higher stock prices plus dividends) are what make shareholders happy, not stock splits," said Kyle Moore, a portfolio manager with Mariner Wealth Advisorsin downtown Cincinnati. "I don't think stock splits change much of anything."
But analysts admitted P&G's history of stock splits are part of its lore and a segment of its longtime investors consider splits part of its allure.
"I think it's a jump ball I believe it could go either way," said John Lame, chief executive of Lenox Wealth Management in Kenwood. He guessed there was a 60% chance the stock would split in the next six months.
Though P&G's nearly 50% stock gain since the fall of 2018 gives executives leeway on operations, some investors will stillwant to see a new stock split.
"It's more an emotional positive in the long run," said Steve Kehoe, partner at Kehoe Financial Advisors in Springdale, a northern suburb of Cincinnati. "But it confirms to a lot of individuals that P&G has righted the ship and is moving in the right direction."
Kehoe guessed there was a 50-50 chance for a P&G stock split in the next few months.
Two years after nearly losingthe largest proxy fight in U.S. corporate history, P&G may be inclined to keep mollifying investors.
P&G stockholdersroutinely ask about potential splits at its yearly shareholders' meetings and it will probably field such questions next week when the company welcomes them for the latest annual gathering.
Regardless of the number of questions, the company's solid turnaround in the past year will make for a more cheerful meeting than last year's where CEO David Taylor again asked investors to remain patient.
P&G's stocksurged as sales recaptured traction. This summer, executives issued an upbeat forecast that predicted momentum would continue.
Analysts noted historic reasons for keeping P&G's stock under $100 a share no longer apply. P&G generally liked to keep shares affordable for the retail investor to ensure it was widely held and more stable.
But times have changed: Discount brokers, electronic trading and the popularity of index investing have made stocks more accessible to small investors, and there's less pressure to keep shares affordable.
Stock splits by America's largest companies listed on the Standard & Poors 500 (the S&P 500) have dwindled from 114 in 1986 to five in 2017.
P&G is one of 21 out of 30 companies on the Dow Jones Industrial Average that have triple-digit stock prices, which aren't unusual anymore: Amazon's stock price is north of $1,700 a share, and Chipotle tradesabove $800.
For the latest onP&G,Kroger, Fifth Third BankandCincinnati business news, follow@alexcoolidgeon Twitter.
This article originally appeared on Cincinnati Enquirer: P&G: Will the company split its stock for the first time in 15 years?
