The Apple Stock Split: What Investors Need to Know (AAPL) By David Zeiler

A 7-for-1 stock split is fairly unusual, as most companies typically do a 2-for-1 or 3-for-1 split. But it appears Apple was determined to get the share price below $100.

The reason Apple Chief Executive Officer Tim Cook gave in April was that the company wanted to make AAPL stock "more affordable."

Experienced investors know that the share price is irrelevant, but Cook realizes that a lower price at least makes a stock appear more affordable.

A more likely reason for the dramatic 7-for-1 split is that Cook wanted to get the price to where AAPL could reasonably be considered for inclusion in the Dow Jones Industrial Average.

Because the Dow is price-weighted, AAPL at $600 or $700 would distort the index. But AAPL at $90 or $100 would fit right in with other Dow components.

While being part of the Dow doesn't affect revenue or profits, it does bestow a certain degree of prestige. And it could be that Cook feels Apple now deserves membership in that exclusive club.

So that's the "why" behind the AAPL stock split. But there are a lot of other nitty-gritty details that investors should be aware of.

First, let's get the key dates out of the way.

• The Record Date is June 2 - today. Investors who own AAPL shares as of today are entitled to receive the additional shares due to the split.

• The Split Date is June 6 - Friday. AAPL share split after the market close.

• The Ex Date is June 9 - next Monday. On this day AAPL common shares will start trading at the new split-adjusted price.

Here are a few other facts investors need to know...

The Share Price: If AAPL is still trading around $630 on the split date, it will open at $90 on the following Monday. Since AAPL's all-time high was $705, the split-adjusted price will need to cross $100.72 to reach a new record high.

How It Works: If an investor owns 10 shares of AAPL at $630 a share before the split, that investor will own 70 shares at $90 after the split. The market value of the shares remains exactly the same at $6,300.

The Dividend: Like the stock, the dividend per share also gets divided by seven. So instead of $3.29, the AAPL dividend will drop to $0.47. Investors will get the same payout and yield (well, at least until Apple raises it again.)

Tax Implications: Because the market value remains the same, as does the amount of the dividend paid to each investor, the AAPL stock split will not affect taxes owed by U.S. investors in any way, although Apple recommends that foreign residents consult their tax advisers.

Shares Outstanding: The number of AAPL shares outstanding will increase from 861.38 million now to about 6.03 billion after the stock split. While Apple's market capitalization remains exactly the same, the extra shares will add some liquidity.

In-Between Days: Investors who buy AAPL stock between June 2 and June 6 will still benefit from the split, but their extra shares will simply be credited to their brokerage account a few days later.

Previous Splits: This will only be the fourth AAPL stock split in the company's history (and this one was clearly overdue.) The others were all 2-for-1 splits, which took place on May 15, 1987, June 21, 2000, and on February 18, 2005. Since Apple went public at $22 a share back in December 1980, the split-adjusted IPO price as of June 9 will be $0.39.

Are you affected by the AAPL stock split? Do you think the lower price will help push AAPL stock to a new high, or get it into the Dow? Tell us on Twitter @moneymorning or Facebook.

Apple recently pulled off the biggest deal in its history when it agreed to buy Beats Electronics for $3 billion. Here's why Apple did it, and what it means for the company...