Can I buy fractional shares of stock?

This guide answers "can i buy fractional shares of stock" in clear, practical terms. Learn what fractional shares are, how brokers execute them, which securities qualify, tax and transfer implicati...

2025-12-28 16:00:00

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Can I buy fractional shares of stock?

Lead: Fractional shares are portions of a single share that let you buy stock by dollar amount rather than only whole-share quantities, and many U.S. brokerages now let retail investors purchase them.

If you searched "can i buy fractional shares of stock" and want a practical, beginner-friendly answer: yes — many platforms let you buy partial shares by dollar amount. This article explains what fractional shares are, how they work, where to buy them (including Bitget options), the rules and tax considerations, and step-by-step how to buy and manage them.

Definition and basic concept

A fractional share is a partial ownership interest in a single share of a company or an exchange-traded fund (ETF). Ownership is proportional: 0.25 share of a company represents one quarter of the economic rights of a whole share (subject to broker policies). The key distinction is how orders are entered:

Share-based orders: you enter a quantity, e.g., 1 share, 3 shares. Brokers fill whole-share quantities.
Dollar-based orders: you enter an amount in currency, e.g., $50, and receive the fraction of a share that amount buys at execution price.

Fractional-share programs let investors buy by dollar value instead of being limited to whole shares. That lowers the entry barrier for expensive stocks and helps implement dollar-cost averaging with small amounts.

History and adoption

Fractional ownership is not entirely new. Early forms appeared through dividend reinvestment plans (DRIPs) and corporate actions that produced partial shares. Historically, retail investors received fractional shares when dividends were reinvested: brokers would allocate fractional amounts because dividend reinvestment buys do not always divide into whole shares.

Modern retail fractional trading expanded in the late 2010s and into the 2020s. Broker platforms added explicit dollar-based order entry and internal bookkeeping systems to allow customers to place $-based purchases of individual stocks and ETFs. As of June 2024, industry guidance and broker documentation showed the feature was widely available across many major brokers and fintech platforms, increasing retail access to high-priced securities and enabling finer diversification.

How fractional-share trading works (mechanics)

Mechanically, fractional trading involves these components:

Order entry method
- Dollar-based order: you type how much money to invest (e.g., $50). The platform calculates the fraction based on execution price.
- Fraction-share quantity: some brokers let you specify a decimal share amount (e.g., 0.125 shares).
Execution and rounding
- Execution price determines fraction size. If a stock trades at $200 and you place a $50 order, you receive 0.25 share.
- Brokers round to a certain number of decimal places (often 6–8 decimal places for internal records). Rounding conventions vary by broker and determine the fractional quantity shown on your statement.
Aggregation and custody
- Many brokers aggregate retail fractional orders and execute them as block orders in the market or on an execution venue. The broker then allocates fractions back to customer accounts proportionally.
- Some brokers hold whole shares in custody and allocate ownership interests in those whole shares across customers using internal ledgers.
Example: dollar-based buy
- You place a $120 buy for a stock trading at $480 per share. Your account receives 0.25 share ($120 / $480).
- If the execution occurs at $482, received fraction = $120 / $482 ≈ 0.24895 share; broker rounding applies.

Because execution price can vary slightly from the quoted price, the fractional quantity may not equal the simple division of order amount by posted quote.

Eligible securities and limits

Eligibility typically includes: listed National Market System (NMS) stocks and many ETFs. Common exclusions include:

Over-the-counter (OTC) securities
Certain American Depositary Receipts (ADRs)
Securities with low liquidity or special settlement rules

Broker-specific rules determine the final list. Many platforms exclude penny stocks, illiquid issues, or certain restricted securities. Minimum and maximum order sizes vary: some brokers set a minimum dollar amount per fractional trade (for example, $1, $5, or $10), and some set maximums to limit risk. Always check current broker documentation for exact eligible securities and minimum orders.

Where you can buy fractional shares (brokers & platforms)

Many major brokerage firms and fintech platforms offer fractional-share trading. Examples commonly listed in industry coverage include established brokerages and newer app-based brokers. When comparing platforms, watch these differences:

Minimum dollar amount per trade
Which securities are eligible (individual stocks, ETFs, ADRs)
Order routing and execution details (real-time vs batch)
Fees or inactivity rules tied to fractional positions

Bitget: For investors who also use crypto and Web3 tools, Bitget provides brokerage and trading services and related custody products. If you prefer consolidated access to crypto and tokenized financial products alongside traditional investing workflows, check Bitget’s product pages and Bitget Wallet for current fractional offerings and custody details. Availability and exact features vary by region and over time; always consult Bitget’s official documentation.

Note: broker policies change. The examples above reflect the common market picture as of mid-2024.

Order types and execution timing

Order types for fractional shares vary by broker. Common behaviors include:

Market orders: many brokers accept market orders for fractional shares and execute them during market hours. Market orders fill at available execution prices and may be filled via aggregation or block trades.
Limit orders: fewer brokers allow limit orders for fractional shares. When supported, limit orders specify a maximum price you’re willing to pay. If a limit is not met, the order may remain unfilled.
Time-in-force: brokers may restrict time-in-force options (e.g., day-only vs GTC) for fractional orders.

Execution timing matters. Some brokers execute fractional orders in real time during market hours. Others use periodic batches (for example, morning/afternoon batches) or internal crossing windows. Batch execution can mean that an order placed during market hours is executed at the batch price, which might result in a different fill price than expected.

Execution affects fill price and the fraction you receive. If a broker aggregates orders and executes a single block at a single price, your fraction is allocated based on that block price. If the broker executes in the open market, your fill could reflect prevailing bid/ask spreads.

Dividends, voting rights, and corporate actions

Dividends

If you hold fractional shares, dividends are typically paid pro rata. For example, a $0.40 per-share dividend on 0.25 share yields $0.10 before taxes and fees.
Brokers may hold and pay dividend cash in your account or reinvest via DRIP according to your account settings.

Voting rights

Voting rights for fractional holders vary. Many brokers consolidate fractional positions and may issue partial or limited voting rights or proxy votes on your behalf. In some cases, fractional holders may not receive direct voting certificates and may have restricted participation in voluntary corporate votes.

Corporate actions

Stock splits: brokers adjust fractional quantities proportionally.
Mergers and tender offers: brokers follow their corporate-action processing rules and may cash out fractional positions or process them based on the action specifics.

Because broker practices differ, check your broker’s corporate-action policies to understand how fractional holdings will behave.

Transferability and portability

A common practical limitation: fractional shares often cannot be transferred "in-kind" to another broker. When you move an account via an Automated Customer Account Transfer Service (ACATS) or similar, brokers typically transfer whole shares and convert or liquidate fractional holdings.

Typical outcomes:

Fraction conversion to cash: the broker sells fractional shares before transfer and transfers cash proceeds.
Broker-to-broker special arrangements: in rare cases, the receiving broker supports and accepts in-kind fractional holdings; this requires mutual custody and matching systems.

Tax and timing implications arise because selling fractional shares to move cash can create realized gains or losses, and transfer timing may interact with tax lot accounting. If you plan to change brokers and hold fractional positions, review transfer rules in advance.

Tax and reporting considerations

Taxable events

Selling fractional shares triggers capital gains or losses measured by sale proceeds minus cost basis allocated to that fractional lot.
Dividends paid on fractional shares are taxable as dividend income following the same rules that apply to whole-share dividends.

Cost-basis reporting

Brokers track cost basis for fractional positions. Cost-basis reporting on Form 1099-B should include fractional shares; the reporting precision may be limited to a set number of decimal places.
When selling a fractional portion that is part of multiple lots, lot-selection rules (FIFO, specific ID) affect realized gain or loss computation.

Practical tax notes

Keep accurate records. Because fractional lots may result from multiple dollar-based purchases, your cost basis for the aggregate position may consist of many small lots.
For partial sales, confirm which tax lot method your broker applies. If you need a specific method (specific ID vs FIFO), set that preference in your account before executing the sale.

This article does not provide tax advice. Consult a tax professional for personalized guidance.

Benefits of fractional shares

Lower entry barrier: buy a piece of high-priced stocks with small dollar amounts.
Easier dollar-cost averaging: set recurring purchases by dollar amount and accumulate shares over time.
Finer diversification: allocate small amounts across many names rather than concentrating in a few whole shares.
Efficient use of cash: deploy spare cash into securities without leftover uninvested balances.
DRIP compatibility: reinvest small dividends automatically without needing whole shares.

These benefits make fractional shares appealing for new investors, savers using periodic contributions, or those who want targeted allocations to expensive securities.

Risks and limitations

Execution and price risk: fractional fills depend on execution price; if routed in batches, price may differ from the quote at order entry.
Rounding differences: decimal rounding conventions can produce small discrepancies in portfolio accounting.
Voting and corporate participation: fractional shareholders may have limited voting rights or constrained access to certain voluntary corporate benefits.
Transfer limitations: fractional shares often must be sold before transfers, which can trigger taxable events.
Broker-specific restrictions: fees, minimums, or lack of limit-order support can affect strategy.

Being aware of these limitations helps set appropriate expectations for fractional investing.

Custody, regulation, and investor protection

Custody

Fractional shares are ordinarily held in customer accounts under broker custody. Brokers either hold whole underlying shares in omnibus accounts with custodians or maintain detailed internal records showing fractional entitlements.

Regulation and investor protection

FINRA and other regulators provide guidance on brokerage practices. As of June 2024, FINRA materials and investor-education pages included information about fractional-share risks and best practices.
SIPC protection generally applies to brokerage accounts for missing assets due to broker failure (subject to SIPC rules). SIPC covers missing securities and cash up to limits but does not protect against market losses.

Read your broker’s custodial disclosures and regulatory notices to confirm how fractional holdings are protected and recorded.

Fractional shares vs other fractional ownership models

Fractional-stock ownership differs from other fractionalization such as tokenized assets or native-divisible crypto:

Legal rights: fractional-share holders typically hold a beneficial interest recorded by a broker under securities law; tokenized fractional ownership may involve different legal structures and custodial arrangements.
Market structure: stock fractions trade through broker order systems and rely on traditional clearing and settlement; tokenized assets may trade on blockchain networks with native divisibility.
Regulation: equity fractionalization falls within securities regulation; tokenized fractional assets may face securities or commodities regulatory scrutiny depending on structure.

Do not assume the same protections or mechanics apply across different fractional models.

Practical how-to (step-by-step)

Here is a typical step-by-step process to buy fractional shares:

Choose a broker that supports fractional shares
- Verify eligible securities, minimums, and order types.
- If you want crypto + equities integration, check Bitget product pages and Bitget Wallet for combined custody options.
Open and fund your account
- Complete KYC/identity verification and deposit funds to the brokerage cash balance.
Search for the eligible security
- Use the ticker symbol or company name. Confirm the security is eligible for fractional purchases.
Enter a dollar-based or fractional-quantity order
- Dollar-based example: enter $50 to buy a stock priced at $200; you should receive 0.25 share (subject to execution price).
- Fraction-quantity example: enter 0.125 share directly if the broker allows.
Review execution details and submit
- Check minimums and whether a market or limit order is used. Review estimated execution time.
Confirm fills and track cost basis
- After execution, verify the fractional quantity, cash deduction, and cost basis recorded in your account.
Manage dividends and DRIP settings
- Decide whether to reinvest dividends. DRIP can compound fractional holdings automatically.
Consider transfer or withdrawal implications
- If you plan to move accounts, review transfer rules for fractional positions.

Common FAQs

Q: Can fractional shares pay dividends? A: Yes. Dividends are typically paid pro rata on fractional shares and credited to your account as cash or reinvested per your DRIP setting.

Q: Are fractional shares real ownership? A: Fractional shares represent a beneficial ownership interest recorded by your broker. You generally have economic rights (dividends, price appreciation) but the exact mechanics (voting, certificate issuance) depend on the broker’s custodial arrangements.

Q: Can I vote if I own fractional shares? A: Voting rights vary. Some brokers aggregate fractional holdings and may provide limited proxy voting. Check your broker’s proxy and voting policy for details.

Q: What happens if I transfer accounts? A: Fractional shares often cannot be transferred in-kind. Brokers commonly sell fractional positions and transfer cash. This can create taxable events and timing considerations.

Q: Can I use limit orders for fractional shares? A: Some brokers support limit orders for fractional shares; many do not. Confirm with your broker.

Q: Does SIPC cover fractional shares? A: SIPC coverage applies at the brokerage account level according to SIPC rules; fractional holdings held by a failed broker would generally be part of customers’ securities under SIPC protections, subject to limits.

References / Sources used

NerdWallet — "Fractional Shares: What They Are and Where to Buy Them" (industry guide)
Fidelity — "Fractional shares | Dollar-based investing"
Charles Schwab — "Fractional Shares | Invest in Stock Slices"
Bankrate — "Fractional shares: What are they and how do I buy them?" and "Best Brokers For Fractional Share Investing"
Business Insider — "Fractional Shares: Investing in Stocks Without Buying a Whole Share"
Robinhood — "5 Things to Know About Fractional Shares" and Robinhood support pages
FINRA — "Investing in Fractional Shares"
Apex Fintech Solutions — "Fractional Shares: What are they and how do they work?"

(Readers should consult the listed providers’ official pages for the most current policies and exact data.)

Next steps and call to action

If you want to try fractional investing, pick a broker that supports dollar-based orders, fund your account, and start with a small purchase to see how execution and reporting appear in your statements. For users who prefer unified access to crypto and tokenized products alongside traditional assets, explore Bitget’s products and Bitget Wallet for custody and cross-asset management. Always review the provider’s current policies for eligible securities, minimums, execution, and transfer rules.

Thank you for reading. If you have specific platform questions or want a checklist to compare brokers for fractional investing, ask and I’ll prepare a tailored comparison.

The content above has been sourced from the internet and generated using AI. For high-quality content, please visit Bitget Academy.