Can you buy a fraction of a stock? Guide

Can You Buy a Fraction of a Stock?

Buying less than one full share is possible at many modern brokerages and investment platforms. If you’re asking "can you buy a fraction of a stock," this guide explains exactly what fractional shares are, how dollar-based orders work, where you can get them, the mechanics behind execution and custody, benefits and trade-offs, tax and regulatory considerations, and a practical step-by-step for placing your first fractional order. You’ll also find a checklist to compare brokers and special notes about retirement accounts, automated investing, and international access.

As of June 2025, according to broker documentation and consumer-finance guides, a broad set of major retail brokers now supports dollar-based or fractional-share trading, and fractional ownership is a standard feature in many robo-advisors and dividend reinvestment plans. This article synthesizes authoritative broker pages, industry guides, and regulator-noted practices to give a current, neutral overview.

Definition and scope

When people ask "can you buy a fraction of a stock," they mean purchasing less than one full share of an equity or ETF — commonly called a fractional share.

• Fractional shares: Portions of a whole share, recorded as fractional ownership on a broker’s books. Fractional shares let investors buy exposure to high-priced names with a small dollar amount.
• Dollar-based orders vs. share-quantity orders: A dollar-based order instructs the broker to buy $X of a security (for example, $50 of a stock). A share-quantity order requests a specific number of whole shares (for example, 1 share). Dollar-based orders typically produce fractional shares when the dollar amount does not equal a whole share price.
• Instruments that commonly support fractions: U.S.-listed stocks and ETFs are the most widely supported. Some mutual funds can also be purchased in dollar amounts that yield fractional fund shares. Cryptocurrencies are natively divisible (you can buy 0.001 BTC, etc.) but are a separate asset class with different custody and regulatory rules. When asking "can you buy a fraction of a stock," remember crypto divisibility is not the same mechanism as broker fractional-share programs.

History and adoption

Fractional ownership has roots in dividend reinvestment plans (DRIPs), which historically allowed investors to reinvest dividends into fractional shares of the same company. In the 2010s, retail broker innovation and platform competition expanded fractional access: brokers began offering dollar-based purchases, recurring buys, and fractional trades to lower entry barriers.

By the early 2020s, a trend of broad adoption emerged: most large retail brokers announced fractional or dollar-based programs to attract smaller investors. As of mid-2025, major brokerages and a range of robo-advisors routinely list fractional trading as a feature on their product pages and consumer guides.

Key milestones:

• DRIPs: Longstanding mechanism for fractional reinvestment.
• 2010s–2020s: Broker-led dollar-based order rollouts and product expansions.
• 2020s: Widespread adoption across full-service brokers, discount brokers, and automated advisors.

These shifts mean fractional trading is no longer a niche product but a mainstream feature for retail investors who prefer to invest fixed dollar amounts.

How fractional shares work (mechanics)

Order types and execution

When you place a dollar-based order, the broker converts your dollar amount into a fractional ownership based on the market price at execution.

• Dollar-based order flow: You submit an instruction like "buy $25 of TICKER." The broker converts $25 into a fraction of a share at the execution price, accounting for fees or commission policies if applicable.
• Execution practices: Brokers use different methods to execute fractional orders:
  • Internalization or internal matching: The broker fills the order from its internal inventory or matches it against other customer orders. This can improve speed but requires broker disclosure about execution practices.
  • Pooled/omnibus orders: The broker aggregates many small dollar orders from customers into a whole-share order to the exchange or market maker; the whole shares are allocated back to customers proportionally.
  • End-of-day matching: Some brokers execute dollar-based orders on a periodic schedule (for example, at market close) and then allocate fractional ownership based on a reference price.

Execution quality and transparency vary across providers. If execution price sensitivity is a priority, check a broker’s disclosures about order routing and price improvement.

Custody and recordkeeping

Fractional shares are usually held in book-entry form on the broker’s records rather than as share certificates.

• Book-entry and omnibus accounts: Brokers commonly use omnibus or ledger-style custody where the broker holds whole shares in aggregate and records fractional ownership in individual customer accounts. The broker’s internal ledger shows your fractional balance.
• Customer statements and visibility: Most brokers show fractional positions on account statements and portfolio pages with decimal precision (for example, 0.3579 shares). Brokers typically display the dollar value and share fraction together.
• Legal ownership: You typically have an economic claim to the fraction of the share (pro rata dividend and capital gain exposure), but the broker’s omnibus custody model means the broker holds the actual whole shares and must track fractional entitlements precisely.

Settlement, tax lots and reporting

• Settlement timing: Fractional trades generally settle according to the standard settlement cycle for the instrument (for U.S. equities, that is typically T+2). The broker will reflect the position as settled in your account per their rules.
• Tax lots: Brokers may assign tax lots to fractional positions using their standard lot-assignment methods (FIFO, specific identification if offered, or average cost for some funds). Check your broker’s tax-lot policy; some brokers allow you to specify lot identification for fractional fills.
• Dividends and capital gains reporting: Dividends on fractional shares are paid pro rata relative to your fractional holding and reported on the broker’s tax forms (for example, Form 1099-DIV in the U.S.), consistent with whole-share holdings. Capital gains from sales of fractional shares are reported similarly, with the broker providing cost-basis and proceeds information per regulatory standards.

Ways to acquire fractional shares

Retail brokers offering fractional trading

Many retail brokerages provide dollar-based or fractional-share options. Each broker implements fractional trading differently; differences include minimum purchase amounts, whether fractional orders execute intraday or end-of-day, and the set of supported securities.

Common features across brokers:

• Dollar-minimums: Some brokers set a minimum dollar amount per fractional order (e.g., $1, $5, $10). Others allow very small purchases.
• Recurring investments: Many platforms let you schedule recurring dollar purchases (daily, weekly, monthly) — ideal for dollar-cost averaging.
• Supported instruments: Most firms allow fractions for U.S.-listed common stocks and ETFs; foreign stocks or ADRs may be excluded.

Examples of implementations referenced in industry guides and broker pages: Fidelity, Interactive Brokers, Vanguard, Robinhood, Charles Schwab, Public, and others have published documentation describing fractional or dollar-based trading programs. When comparing providers, review minimums, execution schedule, listing of eligible securities, and whether fractional trades are available in taxable and retirement accounts.

Dividend reinvestment plans (DRIPs)

DRIPs automatically reinvest dividends into additional shares of the paying company or fund. Historically, DRIPs were a primary way retail investors accumulated fractional shares because dividend reinvestment converts cash dividends into fractional ownership.

• Automatic fractional accumulation: DRIPs enable fractional allocation by converting each dividend payment into as many whole and partial shares as the dividend amount allows.
• Availability: Many brokerages offer DRIPs for eligible securities; some companies provide direct stock purchase and DRIP programs for shareholders.

DRIPs remain a straightforward path to fractional ownership for long-term investors focused on compounding.

Robo-advisors and automatic investing

Robo-advisors often accept dollar-based deposits and allocate them across many securities, which requires fractional shares to construct diversified portfolios with small amounts.

• Fractional allocations: Robo-advisors divide your deposit into target-weighted allocations, buying fractional shares of ETFs or stocks as needed.
• Rebalancing: Fractional shares allow precise rebalancing by dollar amounts without requiring liquidation to whole shares.
• Cost efficiency: Because robo-advisors aggregate trades and use fractional share bookkeeping, they can service small accounts efficiently.

This model is a common reason robo-advisors rely on fractional trading to deliver diversified exposure at low minimums.

ETFs and mutual funds (dollar-based trading)

ETFs and many mutual funds are naturally suited to dollar-based purchases. Buying $100 of an ETF can result in a fractional ETF share.

• Mutual funds: Many mutual funds have long allowed fractional-share purchases and redemptions, with reinvestment and daily NAV pricing.
• ETFs: Although ETFs trade in whole-share lots on exchanges, brokers commonly offer dollar-based ETF purchases that create fractional ETF holdings in customer accounts through internal aggregation.

Large fund providers often publish dollar-based trading options for broker clients; check the fund and broker pages for specifics.

Synthetic or derivative alternatives

Some products provide exposure to price movements without transferring underlying fractional shares: for example, contracts for difference (CFDs) or certain synthetic instruments. These have different regulatory, custody, and tax implications.

• CFDs and derivatives: Offer price exposure but do not confer share ownership. Tax treatment, investor protections, and availability differ by jurisdiction.
• Broker-provided synthetics: Some firms provide structured products or unitized wrappers that mimic fractional exposure.

If ownership rights (dividends, voting) matter, review whether the product delivers legal ownership or only price exposure.

Benefits of fractional shares

Fractional shares reduce barriers and open up new strategies for small-dollar investors:

• Lower entry barrier to expensive stocks: You can buy $10 of a company trading at $1,500 per share.
• Easier diversification: A fixed dollar amount can be spread across many securities to build a diversified portfolio even with limited capital.
• Dollar-cost averaging: You can automate recurring $X purchases, which smooths average purchase price over time.
• Micro-investing and recurring purchases: Fractional shares power apps and programs aimed at frequent small investments.
• Precise rebalancing: Rebalance by dollar amounts rather than rounding to whole shares, achieving target allocations more accurately.

Collectively, these benefits make investing accessible to more people and simplify small-account portfolio management.

Limitations, risks and trade-offs

Fractional shares are powerful, but they have trade-offs you should understand.

Limited availability and selection

Not every security supports fractional ownership. Typical exclusions include:

• Certain foreign-listed stocks or securities on non-U.S. exchanges.
• Illiquid securities, ADRs, or very thinly traded names.
• Some brokerages limit fractions to U.S.-listed equities and ETFs.

Check your broker’s eligible-securities list before assuming a ticker accepts fractional orders.

Transfer and portability issues

Transferring fractional shares between brokers may be limited:

• ACAT transfers and in-kind transfers generally apply to whole shares; fractional holdings may need liquidation or cash transfer.
• Some brokers will cash out fractional positions and transfer the proceeds, which can generate tax events.
• If portability matters, verify the broker’s fraction-transfer policy.

Voting rights and corporate actions

Fractional owners have pro rata economic rights, but practical handling can differ:

• Proxy voting: Brokers may aggregate fractional holdings for voting or issue limited voting rights. Policies vary; some brokers may not pass through voting for fractional amounts in all cases.
• Corporate actions: Stock splits are typically applied pro rata. Complex actions (spin-offs, rights offerings) may be subject to broker rules and could require special handling.
• Class actions and rights: Claims are generally pro rata, but procedures differ across custodians.

If shareholder voting is a priority, confirm how your broker handles fractional votes.

Execution quality and price exposure

Filling fractional orders can involve internalization, pooled orders, or timed executions. Consider:

• Execution price differences: Aggregation and internal fills may cause differences versus a direct exchange-located whole-share trade.
• Markups or spreads: Some brokers may route small orders to market makers or use internal inventory, which can introduce small markups; review broker disclosures on fees and price improvement practices.
• Timing: End-of-day or batch executions can lead to slippage relative to realtime prices.

These differences are generally small for long-term investors but can matter for active traders.

Fees and ownership nuances

• Fee structures: Although many brokers offer commission-free fractional trades, some may charge fees or restrict low-dollar operations.
• Rounding and residuals: Very small residual fractions—commonly called residual holdings—may be handled differently; some brokers reserve policies to round or aggregate tiny fractions.
• Tax lot complexity: Fractional sales can produce fractional tax-lots, and lot management features vary by broker.

Understanding your broker’s fee and residual policies helps avoid surprises.

Regulatory, tax and legal considerations

Fractional-share dividends are treated pro rata like whole-share dividends for tax purposes. Tax reporting follows standard rules, with brokers issuing the appropriate tax documents.

• Dividends: Paid pro rata on fractional holdings and reported on standard tax forms (for U.S. investors, typically Form 1099-DIV).
• Capital gains: Sales of fractional shares generate capital gain/loss results based on your cost basis; brokers must report proceeds and cost basis per IRS rules.
• Regulatory oversight: Fractional programs fall under the general securities regulatory framework. Brokers are required to follow custody, reporting, and best-execution rules and must disclose order-routing and internalization practices.
• Jurisdictional differences: Rules differ across countries. If you’re investing from outside the U.S., verify local tax and regulatory treatment.

This article avoids tax advice. For personal tax treatment, consult a qualified tax professional or your broker’s tax documentation.

How to choose a broker or platform for fractional investing

Use this checklist to compare providers and choose a platform:

• Supported securities: Which stocks, ETFs, and funds accept fractional orders?
• Minimums: Minimum dollar amounts for single and recurring purchases.
• Recurring investment options: Are scheduled buys available and customizable?
• Fee structure: Commissions, SEC fees, or platform fees on fractional trades.
• Transfer policy: Can fractional shares be transferred in-kind, or will they be cashed out?
• Dividend and DRIP handling: Automatic reinvestment policies and timing.
• Proxy voting and corporate-action policy: How voting rights and actions are handled for fractional holders.
• Tax reporting and tax-lot features: Does the broker provide cost-basis detail and lot-level selection tools?
• Execution transparency: Disclosures about routing, internalization, and execution frequency.
• Customer support and reputation: Reviews, responsiveness, and reliability.

Examples of resources to compare features: consumer finance guides and broker documentation provide comparisons of minimums, eligible securities, and recurring-investment options. For the most current details, consult the broker’s own help pages and fee schedules.

Note: If you hold crypto or use crypto-native wallets, consider Bitget and Bitget Wallet for secure custody and fractional crypto exposure; crypto assets are natively divisible and a different asset class than equities.

Practical step‑by‑step: buying your first fractional share

1. Open an account: Choose a brokerage that supports fractional trading and complete account setup.
2. Fund the account: Deposit funds using bank transfer, ACH, or other supported methods.
3. Check fractional availability: Search the ticker in the platform and confirm dollar-based orders are supported (look for options labeled "buy by dollar," "fractional buy," or similar).
4. Place a dollar-based order: Enter the dollar amount you want to invest (for example, $25) and submit. Choose market or specified order options per platform capabilities.
5. Choose recurring buys (optional): If you want dollar-cost averaging, schedule recurring purchases.
6. Monitor settlement: Confirm the trade has settled per the platform notifications and check your account’s holdings and cost basis.
7. Track dividends and tax documents: Note dividend receipts and obtain year-end tax statements from the broker.

When you type "can you buy a fraction of a stock" into a platform search or help box, look for guided forms labeled for dollar-based purchases to confirm steps specific to that broker.

Special topics and use cases

Using fractional shares in retirement accounts (IRAs, 401(k) rollovers)

Many brokers permit fractional holdings inside IRAs and other retirement accounts. Benefits include:

• Greater flexibility to invest small contributions and maintain target allocations in retirement accounts.
• Ability to use fractional trades for automatic contributions and rebalancing.

Check whether your broker supports fractional trades inside tax-advantaged accounts and whether any special rules apply for withdrawals or rollovers. Fractional holdings may complicate in-kind transfers during rollovers, so plan accordingly.

Fractional shares and automated investing strategies

Fractional shares enable micro-dollar-cost averaging and automated rebalancing. Use cases include:

• Thematic investing: Allocate small sums across multiple theme-related stocks or ETFs.
• Rebalancing: Maintain target weights precisely by dollar rather than rounding to whole shares.
• Cash harvesting: Allocate small spare-change amounts into investment accounts automatically.

These strategies are especially useful for smaller portfolios where whole-share rounding would otherwise distort allocation.

International investors and availability

Availability for non-U.S. residents depends on your broker and local regulations. Factors to consider:

• Account eligibility: Some U.S. brokers accept international clients; others restrict residency.
• Local brokers: Brokers in other countries may offer similar fractional features or local equivalents.
• Tax and reporting: Cross-border tax considerations can be complex; verify withholding rules and local reporting obligations.

If you’re outside the U.S., consult your preferred broker’s international account rules to see whether fractional trading is supported.

Frequently asked questions (FAQ)

Q: Can you get dividends on fractional shares? A: Yes. Dividends are paid pro rata based on your fractional ownership and reported on standard tax statements.

Q: Can you vote with fractional shares? A: Voting policies vary. Brokers generally provide pro rata economic rights, but proxy voting for fractional shares may be handled differently or aggregated. Check broker-specific proxy policies.

Q: Can you transfer fractions to another broker? A: Transfer policies vary. Many brokers cannot transfer fractional holdings in-kind via standard transfer processes and may cash out fractions. Confirm the receiving and sending brokers’ policies before initiating transfers.

Q: Are fractional shares safe? A: Fractional shares create the same market exposure as owning the economic value of shares but are often held in omnibus custody. Safety depends on broker custody practices, regulatory compliance, and insurance protections (such as SIPC-like protections where applicable). Review the broker’s custody disclosures.

Q: How are fractional shares taxed? A: Fractional shares follow the same tax rules as whole shares. Dividends and capital gains are reported pro rata. Brokers provide tax documents showing proceeds and cost basis.

Empirical data and broker comparisons

Industry guides and broker pages are the best sources for up-to-date comparisons. Summaries from consumer-finance resources and broker documentation typically note:

• Which brokers offer fractional trading and whether they permit recurring dollar purchases.
• Minimums for single purchases and recurring plans.
• Whether fractions are available in retirement accounts.

Representative differences observed in market summaries:

• Some brokers support per-share price execution intraday with immediate fills; others batch fractional orders to end-of-day allocations.
• Minimum purchase amounts may range from $1 to $100 depending on platform and whether an instrument is an ETF or a stock.
• Coverage of foreign stocks or OTC securities varies; many fractional programs focus on U.S.-listed equities and ETFs.

For actionable comparisons, consult broker help centers and current industry reviews. Always verify the broker’s own documentation for the most accurate, recent details.

See also

• Dollar-cost averaging
• Dividend reinvestment plans (DRIPs)
• Exchange-traded funds (ETFs)
• Robo-advisors and automated investing
• Omnibus accounts and custody ledgers
• ACAT transfers and account portability

References and further reading

Sources used to compile this guide include authoritative broker documentation and consumer-finance guides. For current details and platform-specific rules, consult the broker or provider directly. Representative sources include: Bankrate fractional-share guides, NerdWallet broker comparisons, Investopedia fractional-share explainers, Interactive Brokers fractional trading documentation, Fidelity fractional-shares page, Vanguard dollar-based trading overviews, and major broker help centers. As of June 2025, these publisher and broker pages collectively reflect the mainstream availability of fractional-trading features across retail platforms.

As of 2025-06-30, according to publicly available broker documentation and consumer-finance coverage, multiple major retail brokers and robo-advisors offer dollar-based or fractional trading options; readers should consult individual broker pages for live lists of eligible securities and specific rules.

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Ready to try fractional investing? Open a brokerage account that supports dollar-based purchases, or explore automated plans that use fractional shares to build diversified exposure with small sums. For crypto holdings, consider using Bitget Wallet for native fractional crypto ownership and Bitget exchange services where applicable. Always review platform disclosures and tax notices before investing.