Home › Guides › Fractional shares explained
Fractional shares explained
What are fractional shares and should I use them?
Short answer: A fractional share is a portion of a single share, letting you invest a dollar amount rather than buying whole units. It is what makes a $100 balance genuinely diversifiable when individual shares cost several hundred dollars. The trade-offs are that fractions usually cannot be transferred to another broker and voting rights may not apply.
What it solves
Without fractions, a $200 account buying a $180 share holds one position and $20 of idle cash. With fractions, the same $200 spreads across as many holdings as you choose.
What it costs you
Fractional positions generally cannot be transferred in kind if you move brokers — they are liquidated, which can be a taxable event you did not choose. Some brokers also restrict order types on fractional orders to market orders only.
Fractions and dividends
Dividends are paid proportionally on the fraction you hold, and brokers that support fractional reinvestment can put the whole payment back to work rather than leaving a residual in cash.
Where to do it
Frequently asked questions
Do I get dividends on a fractional share?
Yes, proportional to the fraction held.
Can I transfer fractional shares to another broker?
Usually not. Most transfers require whole shares, so fractions are sold and the cash is transferred instead.
Reviewed August 2026. Information only — not investment, tax or legal advice.