Image source: Intel.
The tech boom of the 1990s led to great success among players in the industry, and Intel (NASDAQ: INTC) turned its dominance in the PC microprocessor space into big returns for shareholders. During the first 30 years of its existence, Intel stock splits were frequent, but since 2000, investors have had to make do without splits. By now, some investors wonder if Intel will ever be in a position to split its stock again. Let's take a look at Intel's past stock splits and look at whether the business might support a future split down the road.
Intel stock splits
Data source: Intel investor relations.
As you can see, Intel hasn't hesitated to split its shares when the time has been right in the past. The impressive run of share-price increases that led to so many splits has produced average annual returns of almost 16% over the past 35 years.
When Intel split its shares
Intel's stock split strategy falls into two distinct periods of its history. During the 1980s, Intel tended to start looking at stock splits when its share price topped $50 for an extended period of time. That was consistent with its status as an up-and-coming player in the fast-growing technology industry, and it kept share prices low to encourage greater investment.
By the 1990s, Intel had ridden the success of its PC microprocessor line to great success. Its x86 chips became the backbone of most personal computers, and demand for PCs was so strong that the market expanded dramatically. With the gain in prominence, Intel also changed its stock split strategy, waiting until its shares topped the $100 mark before choosing to split its shares.
Tech bust fallout
Intel's timing of its last stock split was somewhat unfortunate, coming even as the tech bust had already begun in 2000. After the split, Intel stock traded at around $75 per share, but the shares would fall into the low teens by 2002 before bouncing back.
Since then, Intel has faced several challenges that have kept it from getting back into a position to do further stock splits. First, the rise of mobile devices has challenged Intel's dominance of the microprocessor market, and declining demand for PCs has made Intel's key market less important to the tech industry overall. That's part of what sent the stock down to just over $12 per share during the financial crisis in late 2008 and early 2009, and the company has been slow in developing a strategy for putting its strong reputation to better and more profitable use.
The other factor that has hurt Intel's stock split capability isn't entirely negative from an investor standpoint, but it has slowed the pace of the company's share-price appreciation. During the 1980s and 1990s, Intel either paid no dividend or made a minimal token dividend payment. In recent years, however, Intel has become a healthy dividend-paying stock, with yields that at times have exceeded 4%. Currently, Intel's dividend yield is almost 3%, and that comes despite the fact that the stock has nearly doubled since late 2012. Because dividend payments typically cause the share price to fall by a similar amount, Intel hasn't seen its stock climb as quickly as it did when it paid little or nothing in dividends.
Will Intel split again?
Intel has produced strong returns recently, including a 33% jump in the stock since this time last year. Yet even with the boost, Intel stock carries a price of only around $35 per share. Given Intel's past practice and changes in the way that companies consider stock splits, it would likely take a tripling in price to get the tech giant back into a position to think about splitting its stock again. In order to achieve that, Intel will have to push forward much more strongly to re-establish itself in the mobile field with the same authority it had in PCs. Even in a best-case scenario, it will probably be years before Intel could realistically consider a stock split.
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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.