CP – 5 to 1 split

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Hi guys!

I would like to have your opinion on this news:

Canadian Pacific Railway Limited (CP, CP.TO) said that its board will seek shareholder and regulatory approval for the implementation of a five-for-one share split of the company’s issued and outstanding common shares.

The Annual and Special Meeting of Shareholders is scheduled to be held on April 21, 2021.

If approved by shareholders, the Toronto Stock Exchange, New York Stock Exchange and implemented by the Board of Directors, shareholders will be entitled to four additional common shares for each common share held at a date to be approved by the Board of Directors following shareholder approval.

THANKS!

Claude

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Asked on January 27, 2021 10:59 pm
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Private answer

Hi Claude,

This has no fundamental impact on the company. All this means, is that the shares are being split and you will own 5 shares for every share you own. The dividend is also split accordingly so there is no change and you will still receive the same amount of dividends. Stocks that are trading at high valuations do this to try and appeal to retail investors with lower stock prices. Although it does work sometimes, it doesn't others. I've done research on it, and most times it doesn't. Why? Because fundamentals drive the stock price, not the stock price itself.

Mat

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Posted by Mathieu Litalien
Answered on January 28, 2021 4:30 am
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0
▼
✔
Private answer

Hi Claude,

This has no fundamental impact on the company. All this means, is that the shares are being split and you will own 5 shares for every share you own. The dividend is also split accordingly so there is no change and you will still receive the same amount of dividends. Stocks that are trading at high valuations do this to try and appeal to retail investors with lower stock prices. Although it does work sometimes, it doesn't others. I've done research on it, and most times it doesn't. Why? Because fundamentals drive the stock price, not the stock price itself.

Mat

Marked as spam
Posted by Mathieu Litalien
Answered on January 28, 2021 4:30 am
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