What Are Fractional Shares?

When you buy fractional shares, you’re purchasing a portion, or fraction, of one share of a company or fund. You can receive fractional shares through stock purchases, stock splits, company mergers or dividend reinvestments.

🤔 Understanding fractional shares

A fractional share is simply that: a fraction of one share of equity, such as a stock, index fund or ETF.

Historically, fractional shares weren’t easy to come by (though mutual funds have long permitted fractional share investing). Most investors received them due to stock splits, corporate mergers or dividend reinvestment plans (DRIPs). Some investment strategies, such as dollar-cost averaging, also left investors holding fractional shares.

But in the last decade, the investment landscape has changed drastically thanks to online brokers, robo-advisors and micro-investing platforms. Nowadays, many brokerages explicitly offer fractional shares for purchase. Some even let you dictate the exact percentage you’d like to own instead of a set dollar amount.

What this means for you

It’s not uncommon to see stock prices rise into the hundreds or even thousands for a single share of equity. But not everyone has such large amounts of money to drop on their portfolio at once – let alone on one share of one company. And many successful investors would argue that putting all your eggs in one basket, instead of diversifying, is not a good idea anyway.

That’s where fractional shares come in handy. With this method of investing, you can buy the amount of stock you can afford, whether that’s $5 or $5,000.

As such, fractional investing is a boon to investors who can’t commit enormous amounts of capital to a single share of stock. Plus, it makes it easier to diversify your portfolio by spreading your funds across more securities.

Fractional shares can also pay out dividends, albeit proportional to the number of shares you own. For instance, if you own ½ of 1 share of a stock that pays dividends of $1 per quarter, you’d only receive 50 cents.

And some brokerages even confer shareholder voting rights to fractional shareowners.

Related Qbits

Learn everything about Q.ai Investment Kits and how they help build wealth

Level up your investment game

In just 2 minutes, iQ will help you become the expert your friends go to for investing advice.

Level Up your Investment Game
Tryq Logo






Terms of Use

Form ADV




Fintech Breakthrough Award

Best Retail Investment Company

AI Breakthrough Award

Best Deep Learning Platform

AIBenzinga Global Fintech


Product Hunt’s Golden Kitty

Semi-Finalist – Fintech

Product Hunt

#1 Product of the Day

Product Hunt

#2 Product of the Week

Q.ai is the trade name of Quantalytics Holdings, LLC Quantalytics. Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC (“QAI”), a SEC registered investment advisor. QIA’s Investment advisory services will be available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The parent company of ForbesMedia LLC, Forbes Global Media Holdings Inc. ("Forbes") has a material ownership interest in Quantalytics. Forbes does not give representation nor warranty with respect to the accuracy or completeness of the content on this website. The content on this website is for informational purposes only and does not constitute a comprehensive description of Q.ai`s investment advisory services. By using this website, you understand the information being presented is provided for informational purposes only and agree to our Terms of Use and Privacy Policy. QAI relies on information from various sources believed to be reliable, including clients and third parties, but cannot guarantee the accuracy and completeness of that information. Nothing in this communication should be construed as an offer, recommendation, or solicitation to buy or sell any security. No representation or warranty can be given with respect to the accuracy or completeness of the information, and is subject to updating, revision, and amendment. Additionally, QAI or its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisors. All investing involves risk, including the possible loss of money you invest. Past performance doesn’t guarantee future performance. © 2023 Quantalytics Holdings, LLC. All Rights Reserved.

Copyright © 2023 Q.AI LLC. All rights reserved

We use cookies to provide you with the best experience and show you relevant advertising. Learn more.