Although that phrase may be hard to compute, consider this: Companies split because they feel that their stock price is too high. By doing this, they are also pricing new shareholders (and current shareholders) out of the market.
Also, consider that when you split your shares, you also split your EPS (earnings per share). There is a common fear with splitting the shares, that you will dilute the company and there will be too many shares outstanding, which will ultimately destroy the EPS.
Take a look of how high prices are currently in the market. Let’s look at a few: Lockheed Martin (LMT) is $107, Boeing (BA) is $100, and Union Pacific (UNP) is pushing $160. Now consider if those companies split, their stock price splits. Think of how many more investors would get into Boeing at $50 or Lockheed at around $55. Plus their dividend yield would stay intact.
The Dow Jones as it stands today is about 15,300. If most big dividend companies split, the market could drive to near 30,000 because of all the new money that will flow in. However, the market could also get destroyed from all the dilution of shares. What do you think? Do you think the market would ultimately fail if this happened?
There have been recent splits of large companies in the last couple years already including Nike, Coca-Cola, Estee Lauder, and Colgate-Palmolive.
Maybe some more big boys should split.....P&G.......United Technologies.......Apple.......