As most investors will know right now, VICOM (SGX: WJP) recently announced a proposed stock split 1:4.
Based on the volume weighted average price of S$7.813 per Share for trades done on 12 February 2020, after the implementation of the Share Split would be equal to or higher than the theoretical Share price of S$1.953 per Share
Rationale Behind The Split
- With the reduced share price, it becomes more affordable to investors, increasing liquidity
- With the reduced share price, there will be an increase in the number of shareholders
Does It Affect Current Shareholders?
No ! There will be no change for current shareholders.
What Should You Do?
There is of course 2 things you can do now. Buy now or buy later. There is no telling that the stock will drop or go up after the stock has split, but a stock split does often indicate to the market that the company has been growing and will continue to grow even after the split.
What I Think Will Happen
Post split, most probably the stock will run higher. Why? Because VICOM has been talked about everywhere, giving high, stable and growing dividends year over year. Now that it is more affordable for everyone, those who couldn’t afford it previously will surely join the party.
What Am I Going To Do?
Well I think the market has already priced in the effects of the stock split so getting in now won’t be getting you much gains, even with the dividends. I will personally sit out for now but I might buy some more if it dips along the way like the past 2 days.
If you’re interested in its dividend growth along the years, you can check out this article I wrote, “5 Dividend Growth Stocks to Hold for the Next 10 Years”.
Update : I’ve written a post-split article on VICOM, Should We Buy VICOM After The Stock Split?
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