MasterCard Inc. (NYSE: MA) is getting smart about having a ridiculously high nominal stock price. The credit card processing giant has announced the approval of a 10-for-1 stock split. When your stock price is $763, this matters. MasterCard is just one of 12 stocks needing a stock split in a major way.
MasterCard is also announcing a stock buyback of up to $3.5 billion of its Class A shares. One last issue is that MasterCard is going to boost its dividend by 83%.
Be advised that MasterCard’s market cap of $91 billion implies that this is a buyback of up to 4% of the stock, and the stock just hit a new all-time high on Tuesday at $769.10. How many companies love spending money to keep buying stock or offsetting options at all-time highs?
As far as the dividend, 83% higher sounds impressive. Unfortunately, its dividend will still only be 0.6% after this huge hike. That is almost certainly too small to draw in dividend investors who can find better dividends among other financial stocks.
MasterCard shares popped on the news by more than 1% to $776 in the after-hours reaction on Tuesday. This is good news, but it may need even more good news. At least more liquidity (and share volume) will be headed the way of MasterCard’s stock.
Hopefully the other 11 split candidates will take note that having shares with a price of close to $1,000 is of little benefit. Maybe they think they are all potentially the next Berkshire Hathaway!