The rise of the personal computer changed the course of history, and International Business Machines (IBM -1.06%) was at the center of the rise of the PC. Over the years, the longtime member of the Dow Jones Industrials has represented an icon of the American corporate world, and IBM investors have reaped the rewards both with dividends and with stock splits that have helped boost the tech company's overall returns. After making no move during the 21st century, however, some investors would like to see IBM do a stock split to try to reawaken interest in the company. Let's take a look at IBM's past stock splits to figure out whether investors should expect a future split in the near future.

IBM's Watson is a big part of its future growth plans. Image source: IBM.

IBM stock splits

Date of Split

Split Ratio

Jan. 16, 1946

5 for 4

Jan. 23, 1948

7 for 4

May 7, 1954

5 for 4

May 4, 1956

5 for 4

May 5, 1959

3 for 2

May 5, 1961

3 for 2

May 5, 1964

5 for 4

May 3, 1966

3 for 2

May 9, 1968

2 for 1

May 10, 1973

5 for 4

May 10, 1979

4 for 1

May 9, 1997

2 for 1

May 10, 1999

2 for 1

Data source: IBM investor relations.

As you can see, IBM has made many stock splits over its history, and since 1970, the stock has provided a solid average annual return of about 8%. That's not as high as some other tech companies, but when you consider that the company saw much of its growth in the 1950s and 1960s, the staying power is even more impressive.

When IBM split its shares

IBM's stock split strategy falls into two different eras. In the 1950s through the 1970s, IBM's stock split moves tended to be gradual and reflected appreciation in the share price fairly generally. The number of small 5-for-4 splits accentuates the conservative nature of Big Blue, and it also was one of the only stocks not to hesitate to allow its shares to trade at high price levels. For instance, in the 1960s, IBM traded as high as around $650 per share, and even when Big Blue split its shares, it nevertheless typically stayed in triple-digit territory.

More recently, IBM adopted a slightly more conventional strategy in the 1990s. At that time, when IBM's stock threatened to cross the $200 per share mark, 2-for-1 splits allowed IBM's share price to return to the high double-digits.

What's happened with IBM since the turn of the millennium?

The problems that IBM has faced since its most recent stock split in 1999 are numerous. Early on, the bursting of the tech bubble in the early 2000s sent IBM's share price down substantially, and although it escaped the full carnage that some newer tech companies ended up suffering, IBM nevertheless took a big hit. Moreover, unlike some of its rivals, IBM shares didn't quickly bounce back in the years after the tech bust ended.

IBM has two things that have held down its share price. First, from a fundamental standpoint, Big Blue hasn't been able to generate the growth it once enjoyed. The company was smart to diversify away from personal computers fairly early on, avoiding the full brunt of the move toward mobile devices. Yet since then, IBM has faced considerable competition from other tech giants that have had similar ideas toward moving into higher-margin services and consulting work.

The other thing that has held IBM back is the rise in its dividend yield and the subsequent downward pressure on share prices. Big Blue has been diligent about paying dividends throughout its history, even when most tech giants didn't. However, recent dividend growth has been extensive, and the stock now carries a dividend yield of more than 3.5%. Typically, dividend payments lead to reductions in share price, and so the greater siphoning of dividend income has put a ceiling on share prices.

Will IBM split again?

It's not impossible to conceive of IBM choosing to split its stock, especially if it can turn things around with its fundamental business and build up a new competitive advantage. Yet the overall reduction in stock split activity across the market suggests that IBM would likely be even more conservative than usual in considering a future move. Absent a big recovery in its core market, IBM shareholders shouldn't expect a stock split anytime in the near future.