Share splits

talexuser

Witan is splitting the shares in 5, so you have 5 times as many shares with one fifth of the old dividend for each - no difference in terms of the payout.

I can see some advantage in dividend reinvestment if you have a fixed fee deal, maybe a few pounds left over can be reinvested in a new share(s) compared to before, which can grow in time earlier.

Apart from this small advantage, are there any other pros/cons when a company does this?

AnotherJoe

If the shares were very costly, there's a theory that it makes it more attractive to smaller investors, who would buy say 20 shares but might think having 4 isnt "worthwhile". And that might raise the share price.

Whether that's true I dont know since generally large institutions hold most of the shares anyway.

I had Apple shares that split at $700, 1 for 7 and (obviously) ended up with 7x at $100. I am sort of expecting my Google shares which are around $1k each now to do the same.

EDIT - Just looked and seen Witan are a tenner each so that cant be the reason.
SECOND EDIT;
Well apparent it is
Investors in the £2.2bn Witan investment trust will receive five new shares in exchange for the one they currently own as the board aims to make the shares more accessible to smaller investors.The plan, revealed in the annual results statement of the trust out this morning (March 12), is being carried out to make the shares cheaper and therefore more accessible to smaller investors.

Chino

In addition, the current voting arrangement whereby shareholders have one vote for every four shares held will be replaced by one vote for each new share of 5 pence par value.
...
Furthermore, the previous position of one vote per four shares held was anomalous.
https://www.witan.com/media/1456/witan_annual_report_2018.pdf

JohnRo

AnotherJoe wrote: »

EDIT - Just looked and seen Witan are a tenner each so that cant be the reason.

I think at £10 it could be a factor, perhaps not specifically with Witan as it seems other factors are at play but EAT and MRC that I remember recently did splits which seemed to be all about reducing the value of each share in to single digits.