Generally a stock split will happen for one of 2 reasons:
1) the company pays a regular dividend, but doesn’t want to pay one this time around. They would then call the stock split a stock dividend, but essentially they are the same thing.
2) If the stock price is above what the company considered their optimal range. For example, if Company A feels their stock trades best at a price between $15-$45 then they will leave it alone. If all of a sudden the stock is trading for a long period of time at $70, the company would split the stock to bring the price back into the optimal range.
Signs of a split: if a company has a regular dividend coming, but earnings are down this year you may see a split instead of a cash dividend. Also if the company stock is trading much higher than its averages have been for the past few years then a split may be on the horizon as well.
Generally a stock split will happen for one of 2 reasons:
1) the company pays a regular dividend, but doesn’t want to pay one this time around. They would then call the stock split a stock dividend, but essentially they are the same thing.
2) If the stock price is above what the company considered their optimal range. For example, if Company A feels their stock trades best at a price between $15-$45 then they will leave it alone. If all of a sudden the stock is trading for a long period of time at $70, the company would split the stock to bring the price back into the optimal range.
Signs of a split: if a company has a regular dividend coming, but earnings are down this year you may see a split instead of a cash dividend. Also if the company stock is trading much higher than its averages have been for the past few years then a split may be on the horizon as well.
Hope this helps!