By Michael Wursthorn

Apple Inc. said Thursday that it will enact a 4-for-1 stock split, essentially giving investors three more shares for every one they own.

Once nearly a given for most firms when their shares topped $100 or so, stock splits by companies in the S&P 500 faded from prominence after the dot-com bust in 2000. They are even more rare among companies in the Dow Jones Industrial Average. Apple is a component of both.

One big investor applauded the move and predicted Apple shares will extend their 31% rally so far this year. The split helps "set the stage for a strong calendar year finish for Apple," said Daniel Morgan, a senior portfolio manager at Synovus Trust Co.

The news appeared well received: Apple shares rose nearly 6% in after-hours trading, also buoyed by an upbeat earnings report

Here's a rundown of what it means for your portfolio.

What does this mean for investors?

Each Apple shareholder at the close of business on Aug. 24 will receive three additional shares for every share they hold. Trading will begin on a split-adjusted basis on Aug. 31.

Stock splits help entice investors who might be put off by a high share price. But that might be less relevant now than the last time Apple did this. Brokerages such as Charles Schwab Corp. give clients the option of buying a fraction of a share for as little as $5, opening up a range of pricey stocks to mom-and-pop investors.

Apple shares traded for more than $400 each in Thursday's after-hours session. A split at that level would knock shares down to about $100.

What does this mean for the company?

Other than a lower stock price, mostly nothing. Splits don't change anything fundamentally about a company or its valuation, although they have a history of generating a short-term pop in a company's stock price. Apple is the most valuable U.S. company, followed by Microsoft Corp. and Amazon.com Inc.

What does this mean for the stock market?

In most cases, stock splits have no impact on the broader stock market, especially within the market-cap weighted S&P 500. But the Dow Jones Industrial Average is a different story. The stock split won't shave any points from the blue-chip index, but it will make the tech company less influential in it.

The Dow is a price-weighted index, meaning higher-priced stocks contribute more points to the index's daily moves. Right now, Apple shares trade higher than the 29 other stocks in the Dow, making its moves the most seismic. The stock split will move it to the middle of the pack, leaving UnitedHealth Group Inc., at $305.23 a share, as the most influential.

The stock split may also widen the Dow's performance differential with the S&P 500 because the highflying tech sector's weighting in the blue-chip index will decline. The S&P is already outperforming the Dow this year by the widest margin in decades, with a gain of 0.5% in 2020 versus a decline of 7.8% for the Dow.

How does the split set Apple apart from other companies?

The split later this summer will mark the fifth time Apple split its shares, highlighting its continued focus on courting individual investors. It also bucks the trend at other big companies that have rallied over the years and trade for hundreds, or thousands, of dollars a share.

Amazon, for instance, hasn't split its stock in more than two decades, leaving its shares to climb to $3,051.88 apiece. Alphabet's two classes of shares trade for as much as $1,538.37 apiece.

Even bigger is Berkshire Hathaway. Its Class A shares go for $291,362 each. Another class it created to help encourage more retail-investor participation in 1996 trades for $194.30 and is in the S&P 500. Berkshire split shares of that second class in 2010.

Among the stocks in the S&P 500, Apple had the 28th-highest share price as of Thursday's close. The most expensive stock in the index is home builder NVR Inc., whose shares are approaching $4,000.

How many times has Apple split its stock?

This will be the fifth time. Apple previously split its stock on a 7-for-1 basis on June 9, 2014, and split on a 2-for-1 basis on February 28, 2005, June 21, 2000, and June 16, 1987.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com