Each month, we add one stock to our model portfolio; the stocks are selected exclusively from companies that have recently announced upcoming stock splits, explains Neil Macneale, editor of 2-for-1 Stock Split Newsletter.

Investors may find this month's addition to our a bit curious. Toyota Motors (TM) announced a 5 for 1 split in Japan back in May. TM trades on the NYSE utilizing the mechanism of American Depositary Receipts (ADRs).

Mellon Bank of New York handles the ADRs for Toyota and put out an announcement on 9/3/21 that it was adjusting its ratio of TM common stock from 1 ADR to 2 ordinary shares to 1 ADR to 10 ordinary shares.

In other words, traders in Japan would see a 5 for 1 split of TM's shares, while traders in the USA would see no change at all in the price or number of ADRs in their account. It was probably for this reason that little to no attention was paid to Toyota's split in the USA.

However, for our purposes, the motivation for TM's board of directors to split the shares in Japan would be the same as that for any American board of directors. The signal provided by the split in Japan leads us to take a look at TM's qualifications for inclusion in the 2 for 1 Index.

Toyota is the world's second largest car company after Volkswagen. At the present time, Toyota is arguably the most advanced in the engineering and progress toward the switch to electric vehicles.

I remind readers that it was Toyota that developed the Prius hybrid over 20 years ago, long before any other car company took seriously the move to electric vehicles.

And the good news is TM has solid numbers — good PE and price-to-book ratios, a dependable 2.5% dividend, very low Beta, etc. Toyota has almost all the characteristics I look for in 2 for 1 Index stocks.

That Mellon chose not to reflect TM's 5 to 1 split in Japan in its NYSE traded ADRs is no reason to ignore its potential for success in the 2 for 1 Index. As such, TM will be added to the 2 for 1 Index.

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