Fractional Shares: How They Work and Who Offers Them

Fractional shares let you own less than one full share of a stock or ETF, usually by choosing a dollar amount to invest instead of a number of shares. If a share costs $500 and you invest $50, you own 0.1 of a share, with the same price moves, in proportion, as a full share.

Most large US brokers now offer them, but the details differ: which securities qualify, how orders are filled, whether you can vote and what happens if you move your account. This guide covers those mechanics. It's education, not a recommendation of any broker or security.

What is a fractional share?

A fractional share is a slice of one share. The SEC's Investor.gov puts it simply: if a stock trades at $1,000 and you have $100, fractional investing lets you buy 0.1 of a share.

You can usually place orders two ways:

• In dollars: "buy $25 of this ETF". The broker converts the amount into shares at the current price.
• In shares: "buy 0.25 shares". You pay whatever that fraction costs when the order fills.

Your fraction rises and falls exactly in line with the full share price. Owning 0.1 of a share that drops 20% means your slice drops 20% too. Fractions change the entry ticket, not the risk.

For the bigger strategy of starting with small sums, see how to invest with little money. This article sticks to how fractional shares themselves work.

Which brokers offer fractional shares?

Many US brokers offer fractional shares, but each sets its own list, minimum and rules. Here's how three widely used brokers describe their programs, as of 2026:

Schwab notes that its former "Stock Slices" offering is now simply called fractional shares and covers most US-listed stocks and ETFs. Rules change, so check each broker's current page before you open an account.

Other brokers, including many in the UK, Canada and Australia, offer fractional investing too, and the way you legally own the fraction can differ. Ask how you own the shares and what happens if you leave. If you're comparing platforms, our guide on how to choose a broker has a full checklist, and the beginner's guide to investing shows where a brokerage account fits in your plan.

How are fractional share orders filled?

Some brokers fill fractional orders in real time, while others collect them and trade in bulk, which can change the price you get. The SEC explains that when a broker aggregates orders, it gathers customers' fractional orders during the day and executes one or more large orders to fill them.

Things the SEC says to check:

• Order types. Some firms only allow market orders for fractions. Fidelity, for example, allows market or limit orders, good for that day only.
• Minimum sizes. Some brokers set a minimum dollar amount per fractional order.
• Trading hours. Fractional trading may be limited or unavailable outside regular market hours.
• Platform. Some brokers only accept fractional orders through their mobile app.

Robinhood, for instance, says it converts a dollar order into the equivalent number of shares and buys at the best available price, and marks these orders "Not Held", which gives it time and price discretion to work the order.

A limit order sets the most you'll pay or the least you'll accept. If your broker allows limits on fractions, they can protect you when prices jump. Our walkthrough of how to open a brokerage account covers order types for a first trade.

Do fractional shares pay dividends and carry voting rights?

You get dividends in proportion to your fraction, but voting rights depend on the broker.

Dividends. The SEC's example: if you own 0.75 of a share and the company pays a $10 dividend per share, you receive $7.50. Robinhood rounds fractional dividends to the nearest penny. Many brokers also let you reinvest dividends automatically, which itself often buys fractional amounts.

Voting. This is where programs differ most:

• Fidelity says you can't take part in proxy voting or most voluntary corporate actions for the fractional part.
• Schwab says you can't vote on less than one whole share, though you take part in mandatory events such as splits and mergers.
• Robinhood says it aggregates and reports votes on fractional shares.

Stock splits. Your fraction is multiplied like a full share. Schwab's example: 0.15 of a share in a 4-for-1 split becomes 0.60 of a share. If a corporate action leaves you with a leftover fraction, the broker may sell it and credit your account with the cash.

What happens to fractional shares when you switch brokers?

You generally can't take them with you. The SEC says you usually can't transfer fractional shares to another firm, so you may have to sell them before or during a transfer.

All three brokers in the table confirm this. Robinhood adds that on a partial transfer, your fractions stay in your Robinhood account; on a full transfer out, they're sold and you receive the cash. Schwab notes that because fractions can't be transferred, your overall SIPC coverage may be affected.

Two consequences to plan for:

1. A forced sale is a taxable event in a taxable account. If the fraction has gained value, you may owe capital gains tax on it, even though you only wanted to move brokers.
2. You lose any time-in-the-market between the sale and reinvesting at the new broker.

The amounts involved are usually small, but they're a reason to pick a broker you're happy to stay with.

What are the downsides of fractional shares?

The main drawbacks are liquidity limits, fewer controls over trades and an easy path to concentration.

The last point matters most. Fractional shares make it easy to buy pieces of expensive, famous companies, but a handful of single stocks is still a concentrated bet. Many beginners use fractions to buy a slice of a diversified ETF instead. Our guide to index funds for beginners explains why.

When do fractional shares make sense?

They're most useful for investing a fixed dollar amount on a schedule. If you invest $50 every payday, fractions let all $50 go to work instead of waiting until you can afford a full share.

They also help when:

• One share of the fund you want costs more than your monthly budget.
• You're rebalancing and want exact dollar amounts in each holding.
• You're reinvesting small dividends.

They matter less if you buy mutual funds, which already let you invest exact dollar amounts, or if you invest large sums where a leftover fraction is trivial. Investing involves risk, including loss of principal, and returns aren't promised whatever size your order is. Account types also differ by country: a 401(k) or IRA in the US, an ISA in the UK, a TFSA in Canada or super in Australia may each handle fractional investing differently.

Next steps

• Put fractional investing into a full plan with our step-by-step guide to start investing.
• See the wider small-budget playbook in how to invest with little money.
• Want more to invest each month? Explore our guide to making money online.