Some companies create so much value over the long term that their stock price soars into the hundreds or even thousands of dollars, which makes it difficult for everyday investors to buy one full share. Those companies will often execute a stock split, which works by increasing the number of shares in circulation and reducing the price per share by a proportional amount.

For example, a 3-for-1 stock split would increase a company's shares in circulation threefold, while reducing its price per share by two-thirds. The value of the company remains the same, but it gives investors the opportunity to buy in with a smaller outlay.

Nvidia, Amazon, and Tesla are among the most notable companies to execute stock splits in the past few years. I think Broadcom (NASDAQ: AVGO) could join them in 2024. Its stock is up 345% over the last five years, and it now costs more than $1,200 to buy a single share.

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Source Fool.com