Euphoria surrounding stock splits played a key role in propelling the S&P 500 to a new high.
One of Wall Street's newest stock-split stocks -- Fastenal -- is set to complete its ninth split next week. However, a few other brand-name businesses have conducted even more splits since their IPOs.
The stock market's leading purveyor of stock splits has leaned on its exceptional balance sheet and sustainable competitive advantages to handily outperform its peers over the last half-century.
For well over three decades, investors have almost always had a game-changing trend or innovation to captivate their attention -- and their wallets. Since late 2022, the rise of artificial intelligence (AI), and the mammoth $15.7 trillion addressable market that accompanies the AI revolution, has been Wall Street's driving trend.
However, it's not the only theme responsible for leading the broad-based S&P 500 to an all-time closing high earlier this year. Excitement surrounding stock splits in some of Wall Street's most-influential businesses has played a foundational role in propelling the broader market higher.
Image source: Getty Images.
Investors have gravitated to companies enacting forward stock splits
A stock split is a tool public companies can lean on to cosmetically alter their share price and outstanding share count by the same factor. The "cosmetic" aspect of splits pertains to them not impacting a company's market cap or in any way affecting underlying operating performance.
There are two types of stock splits, and investors treat them very differently. Reverse splits, which aim to increase a company's share price, are often frowned upon by investors. Companies conducting this type of split are typically struggling from an operating standpoint.
On the other hand, Wall Street tends to get pretty excited about businesses enacting forward stock splits. This type of split is completed to reduce a company's share price in order to make it more nominally affordable for everyday investors/employees who may not be able to purchase fractional shares through their broker. Companies whose share price has soared to the point where forward splits become necessary are, more often than not, out-executing and out-innovating their peers.
In 2024, more than a dozen prominent stocks completed a forward split, such as AI juggernauts Nvidia and Broadcom.
Through mid-May of 2025, three brand-name companies have stepped forward to etch their names into this euphoric trend:
Auto parts supplier O'Reilly Automotive announced a historic 15-for-1 forward split in mid-March, which, with shareholder approval, will take effect after the close of trading on June 9.
Automated electronic brokerage firm Interactive Brokers Group approved its first-ever forward split (4-for-1) in mid-April, which will become official after the close of trading on June 17.
Industrial and construction supplies wholesale distributor Fastenal(NASDAQ: FAST) unveiled a 2-for-1 forward split on April 23, which goes into effect after trading wraps up on May 21.
Wall Street has quite a few stock-split legends
Fastenal's stock split is particularly intriguing given that the company's board has regularly leaned on splits to drum up investor interest since its initial public offering (IPO) in 1987. When this split goes into effect next week, it'll mark the ninth in Fastenal's history as a public company.
While nine completed stock splits is a lot, it's not the most we've witnessed on Wall Street.
A handful of brand-name companies are nearing or have surpassed one dozen stock splits since their respective IPOs. Excluding share reclassifications and share-based dividends, here are some of the more well-known businesses that are stock-split legends:
Coca-Cola(NYSE: KO): 10 completed forward splits since its IPO in 1919.
Dollar General(NYSE: DG): 11 completed splits.
Comcast(NASDAQ: CMCSA): 12 completed splits.
McDonald's(NYSE: MCD): 12 completed splits.
Walmart(NYSE: WMT): 12 completed splits.
Home Depot(NYSE: HD): 13 completed splits.
If there's a common theme among Coca-Cola, Dollar General, Comcast, McDonald's, Walmart, and Home Depot, it's that the overwhelming majority of their stock-split activity occurred between the 1970s and early 2000s. When online brokers began allowing investors to buy fractional shares and reduced or eliminated minimum deposit requirements, the burdens of a high share price went away for most retail investors.
For instance, Home Depot completed all 13 of its stock splits between January 1982 and December 1999. Despite its share price topping $430 in December, the company's board hasn't signaled any need to carry out another split.
It's a similar story for McDonald's and Dollar General, which respectively completed their last forward splits in March 1999 and May 2000. While Walmart did kick off stock-split euphoria in 2024, it had been a quarter of a century since its previous split.
But what if I told you that none of these six legendary companies is Wall Street's most prolific stock-split stock?
Image source: Getty Images.
Say hello to the most prolific of all stock-split stocks throughout history
One true-to-its-name high-flying company has returned nearly 337,000% since January 1973 and overseen (drum roll) 14 stock splits since going public in June 1971 (albeit none in the last 24 years):
March 1977: 5-for-4 stock split
March 1978: 3-for-2
February 1979: 3-for-2
September 1980: 3-for-2
October 1981: 5-for-4
January 1983: 2-for-1
January 1984: 5-for-4
August 1990: 3-for-2
July 1992: 2-for-1
July 1993: 3-for-2
November 1997: 3-for-2
August 1998: 3-for-2
July 1999: 3-for-2
February 2001: 3-for-2
The amazing company behind this historic number of forward splits is none other than passenger airliner Southwest Airlines(NYSE: LUV).
Though the airline industry is rife with business failures, you wouldn't know it by looking at Southwest's outsized gains over the last 54 years.
One of the primary reasons it's been so successful is its ability to compete with major and regional airlines. Southwest's balance sheet is big enough to allow it to successfully navigate economic downturns. However, it's also the only major airline that's been price-competitive with generally smaller/regional low-cost carriers. The end result was 47 consecutive years of profitability through 2019, which was only disrupted by the COVID-19 pandemic.
To build on this point, Southwest Airlines has avoided the debt-driven pitfalls that have previously sunk other major airlines during unforeseen economic recessions. The company closed out the March quarter with roughly $8.25 billion in cash, cash equivalents, and short-term investments, which compares quite favorably to its outstanding debt of around $6.7 billion.
Southwest's operating efficiency also deserves its fair share of credit for propelling the company's stock higher. Southwest aims for quick turnarounds and serves nearly all of the United States' top metros. Commercial planes don't make money sitting in hangars, and Southwest has demonstrated a knack for keeping its assets in the air.
Lastly, the company has successfully anchored customers to its brand with its Rapid Rewards loyalty program. When combined with its competitive costs and consumer-friendly cancellation policy, it's easy to see why flyers have flocked to Southwest Airlines for so long, and why this company became Wall Street's most prolific stock-split stock throughout history.
Should you invest $1,000 in Southwest Airlines right now?
Before you buy stock in Southwest Airlines, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Southwest Airlines wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider whenNetflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation,you’d have $598,613!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,you’d have $753,878!*
Now, it’s worth notingStock Advisor’s total average return is922% — a market-crushing outperformance compared to169%for the S&P 500. Don’t miss out on the latest top 10 list, available when you joinStock Advisor.
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot, Interactive Brokers Group, Nvidia, and Walmart. The Motley Fool recommends Broadcom, Comcast, and Southwest Airlines and recommends the following options: long January 2027 $175 calls on Interactive Brokers Group and short January 2027 $185 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.
