What Are Fractional Shares?

By Matthew Frankel, CFP – Updated Feb 24, 2025 at 3:51 PM

Key Points

Fractional shares let you invest any amount, removing share price barriers.
Fractional shares allow full investment of funds, avoiding unused cash in accounts.
They enable buying high-value stocks with minimal capital, increasing portfolio diversity.

When investing in the stock market, it can be difficult for investors to put all of their money to work or to invest in all of the stocks they want if they are only able to buy entire shares of stock. With many popular stocks trading for $500, $1,000, or more, some newer investors could struggle to afford a single share.

Fractional share investing has gained serious momentum in recent years and has solved some major pain points. Here's a rundown of what fractional shares are, why they're important, and how they work in the real world.

How investing in Fractional Shares works — Image source: The Motley Fool

What are fractional shares?

As the name suggests, fractional shares are a quantity that is less than a full share of stock. For example, if you buy half a share of Walt Disney (DIS -0.90%), that would be an example of a fractional share. If you own a fractional share of a stock, you are entitled to a proportional amount of the gains of holding a full share, as well as a proportional amount of any dividends paid by the company.

To be sure, fractional shares have some drawbacks. As one example, you generally don't get voting rights with fractional shares (although this isn't likely to be an issue for smaller investors). Some brokers restrict when you can sell fractional shares -- for instance, only allowing fractional share orders to fill overnight when the market is closed. And you may encounter small fees for fractional shares.

It's also worth mentioning that fractional shares have been around for a long time, but they were typically only allowed as a tool for dividend reinvestment. In other words, if you received a $50 dividend from a company and elected to reinvest your dividends, you'd be allowed to receive as many shares as possible (even fractions) that your $50 could buy. However, the ability to directly buy fractional shares is a relatively new concept.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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@MattFrankelCFP

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matt Frankel has positions in Amazon, Berkshire Hathaway, MercadoLibre, and Walt Disney. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, MercadoLibre, Tesla, and Walt Disney. The Motley Fool has a disclosure policy.