Splits Are Back

Three stocks have announced that they're splitting their shares: General Mills, Express Scripts, and Danaher Corporations are all splitting 2-for-1 this week. In ordinary times, there would be nothing remarkable about that news, except that these are the first three stock splits of this year among companies in the S&P 500. In fact, they're the first three stock splits in the S&P 500 since AmerisourceBergen did so last June 15, almost a calendar year ago.

Stock splits, of course, are a way for companies to reduce their stock price without reducing value, keeping trading more convenient since it's easier to execute sales in smaller amounts. In normal years, this happens all the time. There were 100 stock splits of S&P 500 companies back in 1997, and the number of splits was in the 30s every year from 2004 to 2006. But when valuations aren't rising, there's very little incentive for companies to split their stock.

So maybe it's a good sign that we're seeing companies split once again. On the other hand, three splits in a year is still a ridiculously low number. We need a lot more of this for it to be a real positive.