“Today Apple (AAPL), which we have mentioned recently as having a lofty 18% weighting in the Nasdaq-100 PowerShares QQQ and a 4.54% weighting in the S&P 500 and is the largest single component weighting in both indexes, has rallied more than 2.5% to as high as $611 on ‘rumors of a stock split and/or dividend,'” Paul Weisbruch writes for ETF Trends. “We are not focusing too much on the rumor of a ‘dividend’ but more-so the possibility of a stock split.”
MacDailyNews Note: There’s no rumor about it. It’s been know for months. Apple’s Board of Directors has declared a cash dividend of $2.65 per share of the Company’s common stock. The dividend is payable on August 16, 2012, to stockholders of record as of the close of business on August 13, 2012.
Weisbruch writes, “We will have to watch closely to see if the rumor specifically of a potential stock split does indeed have any truth to it, because an announced stock split would obviously help the folks at Dow Jones make a quicker decision in potentially adding AAPL to their index, on the basis that it would ‘work better’ if AAPL had a lower notional price. Thus, the price weighted index itself, the DJIA, would not necessarily be unduly influenced by the day to day action in AAPL if the stock were say “$60 (implying a 10 for one split). If this were indeed to happen from start to finish (i.e. rumor becomes truth, AAPL announces stock split, AAPL eventually becomes a Dow component at a fair ‘price’, i.e. $200 or less) there will indeed be money in motion for any indexes/derivatives and managers that are benchmarked if not directly invested in and/or linked to the DJIA. Thus, any upward price pressure in AAPL stock itself, would be felt also in the NDX (given the 18% and rising, current weighting), and for the same reasons, in the SPX (given the 4.54% and rising, current weighting).”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]