What is a fractional share brokerage?

If you want to buy stock that costs $200 per share but only want to invest $10, a fractional share brokerage would allow you to buy 0.05 shares or 5% of a single share. Not all brokerages offer fractional shares, but they are increasingly common among large brokerages with online trading.

Are fractional shares a good investment?

Typically, fractional shares aren't available from the stock market, and while they have value to investors, they are also difficult to sell. A fractional share is a portion of an equity stock that is less than one full share. Fractional shares often result from stock splits, which don't always result in an even number of shares.

Which companies offer fractional shares trading?

Several companies offer to buy and sell fractional shares. Some of these include: In November 2019, Interactive Brokers, a major online brokerage firm, first announced the opportunity to offer fractional shares trading. Later, in January 2020, Fidelity announced that it would offer fractional shares trading for stocks and ETFs.

What happens if a stock split entails a fractional share?

Investors who hold stocks that undergo stock splits and own an odd number of shares would likely end up with a fractional share. For example, if Apple undergoes a 5 for 2 stock split and an investor owns 3 stocks, they would receive 7.5 stocks after the stock split. 3. M&A Activity