Many successful companies reward their shareholders with stock splits, and Kellogg (NYSE: K) is no exception. The food giant has a history of sharing its success with its investors, but lately, Kellogg shareholders have had to deal with a long drought of nearly 20 years since its last split. With the stock having posted sizable gains in the past several years, some investors think it's time for Kellogg to end that drought by making a move toward another stock split. Below, we'll look more closely at Kellogg's stock split history to see if a future split is imminent.
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Kellogg stock splits
Here are the dates and split ratios for the stock splits that Kellogg has done as a public company in the past:
Data source: Kellogg.
It's hard to find details on stock splits that are more than 40 years old, but the splits that Kellogg has done more recently show a pattern that the food company has typically followed in assessing whether to make a move. In the mid-1980s, Kellogg enjoyed spectacular growth as a result of strong economic conditions, and the stock climbed from around $40 per share to more than $70 per share mark in a single year. That spurred the company to do a 2-for-1 stock split in early 1986, and that took the stock back to its more typical trading level in the mid-$30s.
After that, the 1987 stock market crash held Kellogg shares in check for a while. But it didn't take long for the market to recover, and by the early 1990s, Kellogg had not only climbed back to its pre-split levels but continued to advance. The stock hit a high of more than $110 per share before Kellogg's next stock split in 1991 took effect, reducing the share price back to the mid-$50s.
It took several more years, but Kellogg continued to perform well. By 1997, the stock had once again flirted with and finally exceeded the $100 per share mark. A 2-for-1 split took the price down to the $40s.
Image source: Kellogg's.
Why hasn't Kellogg split since 1997?
The problem that Kellogg investors have faced since 1997 is that the food company's stock hasn't produced the returns that shareholders had grown accustomed to seeing before that. Over the past 19 years, Kellogg has produced average annual total returns of just 5.5%. In particular, the stock took a huge hit in the bear market in 2000, losing more than half its value as investors believed that the company's reliance on cereal risked losing touch with younger consumers who had moved beyond traditional breakfast favorites. It took a long time for Kellogg to rebound from that hit, with its late-2000 acquisition of Keebler Foods representing a key effort to try to stoke growth for the food company going forward.
Moreover, the total return figures above include dividends, which currently amount to a dividend yield of almost 3%. That leaves precious little in capital appreciation for the share price to enjoy, and it's only recently that the stock has climbed high enough for a split to seem like a reasonable possibility.
Will Kellogg split again?
Kellogg hasn't yet revealed any imminent plans to split its stock, and its share price has recently backed away from its all-time highs earlier in the year. Kellogg hit a high of around $87 per share in July, but it now trades in the low-$70s. That was high enough to justify a split earlier in Kellogg's history, but its two most recent splits relied on the food giant climbing above the $100 per share mark, and that could take some time.
Moreover, Kellogg might well decide not to do a stock split even if its shares do hit triple digits. Many companies have moved away from stock splits in recent years, instead choosing to keep share prices above $100 as a sign of their success. Kellogg doesn't have much in common with the high-profile technology companies that have led that charge away from stock splits, but it might nevertheless be influenced by their decision.
That said, it wouldn't be surprising to see a stock split from Kellogg in the future. If the stock can continue its impressive run over the past few years and rise toward triple-digit levels, then another two-for-one split could ensue in short order.
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