Will Boeing Do a Stock Split in 2019?

Boeing (BA +4.11%) has been a huge performer in recent years, and 2018 was no different, building on its past success with another solid gain. Admittedly, percentage gains in the low-teens for the year was nothing compared to 2017's monumental rise of nearly 90%, but Boeing is still leading the pack in terms of reaping aircraft orders and capitalizing on a strong airline industry.

At times during 2018, Boeing shares approached the $400 mark. Some investors saw that price as being too high, thinking that a stock split would be an appropriate move to reduce the share price and signal confidence in the aerospace giant's long-term future. After having not seen a split since the 20th century, could Boeing investors finally get what they're looking for in 2019? Let's take a closer look at the company and whether a stock split could come this year.

BA data by YCharts.

Looking for an even dozen

Longtime Boeing shareholders are no strangers to stock splits earlier in the company's history. From the 1950s to the 1990s, Boeing split its shares 11 times, with a roughly even division between 2-for-1 splits and 3-for-2 splits.

The decision-making process that Boeing seems to have followed back then was quite consistent with what you saw from most companies at the time. Early on, it took only modest increases in share prices to prompt a move. Over time, the threshold seemed to grow, hitting the roughly $50 mark in the 1980s and then moving up from there. By the mid-1990s, Boeing let its stock climb to more than $100 per share before pulling the trigger on what proved to be its 11th and final split.

Data source: Boeing investor relations.

Since then, the reasons for making frequent splits have nearly disappeared. It used to be that it was difficult to buy stock in less than 100-share blocks, but now, purchases of even a single share are not only possible but reasonable. In some cases, financial institutions will let you buy just a fraction of a share, making it possible even for those investing $50 or $100 a month to buy a stock whose shares cost more than $300 each.

Will the Dow force Boeing to split its share?

Boeing no longer even stands out among its industry peers. Plenty of defense contractors sport share prices in the $200 to $300 range, and several others have triple-digit stock prices. Aerospace supplier TransDigm Group has even seen its price rise above Boeing's regularly over the past several months.

Image source: Boeing.

Yet Boeing has an additional consideration: It's in the Dow Jones Industrial Average. That makes share price important for another reason, as the Dow is a price-weighted average. Boeing's current price gives it about a 10% weight in the Dow, or roughly three times what its share in an equal-weighted index of 30 stocks would be. For a stock with a $200 billion market cap, that might not seem completely unreasonable -- until you realize that the average has a couple of stocks with triple Boeing's market cap yet have only between 30% to 50% of the aerospace giant's weighting.

Thus far, Boeing has seen no reason to respond to that situation. However, the next-highest weighting among stocks in the Dow is way down at 7%, and several of what had been high-weighted Dow components have seen corrections take their share prices down. Boeing has thus far escaped that fate.

Many investors would see a stock split from Boeing as a sign that the aircraft manufacturer sees its strength continuing for the foreseeable future. But even if Boeing doesn't pull the trigger on a split, it's still possible that its shares will fly higher in the years to come.

Check out the latest Boeing earnings call transcript.