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Overview Top online brokers for fractional share investing in November 2022
Charles Schwab has long been an investor-focused outfit, and starting in 2020 offered another benefit to investors, allowing them to buy a fractional share of any stock in . Called Stock Slices, Schwab’s program allows you to buy a slice of these stocks with as little as $5 and you can buy up to 30 slices at a time. And like trades for regular shares, you’ll be able to place your trades without a trading commission. You’ll continue to be able to reinvest any dividends from your stocks into fractional shares of the same stock. Fractional purchases: Yes Fractional dividend reinvestment: Yes Securities in the program: ~500, including all stocks in the S&P 500 Fidelity is routinely a top contender among brokerages, and not surprisingly features a way to buy fractional shares, which it calls Stocks by the Slice. You can start with just $1 and buy shares of more than 7,000 stocks and ETFs listed on U.S. exchanges. You’ll still be able to purchase stocks with zero trading commissions, and you’ll also be able to reinvest your dividends in more shares, even fractional shares, whether they’re stocks or ETFs. Fractional purchases: Yes Fractional dividend reinvestment: Yes Securities in the program: More than 7,000 stocks and ETFs Long known as a high-powered alternative for professional and active traders, Interactive Brokers also offers fractional shares, which is a boon to investors without those deep pockets. You can purchase fractional shares on the broker’s Pro platform (cost: $1 or at the broker’s tiered rate) or on its Lite platform, where trading is free. However, only stocks with average daily volume of $10 million or a market cap greater than $400 million are eligible for the program. Also eligible: ETFs, foreign stocks trading as American depositary receipts (ADRs) and European stocks. Fractional purchases: Yes Fractional dividend reinvestment: No Securities in the program: More than 11,000 stocks, ETFs and ADRs Robinhood has long been known for its commission-free trading () but it also allows you to buy the tiniest fraction of a share. Yes, you can buy as little as one-millionth of a share of your favorite stocks, and you can buy a huge variety of stocks as well. Stocks trading over $1 per share and with a market capitalization greater than $25 million are eligible for the program and ETFs are available for fractional shares, too. You can also reinvest dividends into fractional shares, but must enable the fractional feature first. Fractional purchases: Yes Fractional dividend reinvestment: Yes Securities in the program: ETFs and stocks above the volume and size thresholds TD Ameritrade doesn’t offer fractional share purchases, but that won’t matter for much longer, since the broker has now been . However, the broker will still be opening new accounts until it’s officially rolled into Schwab late next year or the year following. TD allows you to reinvest any dividends you receive into new shares of that company’s stock. So you’re still able to reinvest your whole dividend and grow your payout. Fractional purchases: No Fractional dividend reinvestment: Yes Securities in the program: More than 5,000 stocks as well as ETFs and mutual funds E-Trade is another broker that’s been acquired (by Morgan Stanley), but the broker figures to continue on under its own banner. The broker doesn’t offer fractional purchases of stock, but it does allow investors to reinvest their dividends into fractional shares. E-Trade will reinvest dividends only in a stock or ETF that is trading above $5 per share. Fractional purchases: No Fractional dividend reinvestment: Yes Securities in the program: Thousands of stocks and ETFs Merrill Edge is another broker that allows dividend reinvestment in fractional shares but does not allow clients to purchase fractional shares directly. Merrill lets investors reinvest dividends from stocks and ETFs as well as mutual funds. You can quickly set up whether you want each security in your portfolio to reinvest with an online selection, and if you change your mind, you can flip your choice later on just as easily. Fractional purchases: No Fractional dividend reinvestment: Yes Securities in the program: Thousands of stocks, ETFs and mutual funds Vanguard is well known for its mutual funds and ETFs, and while you can buy fractional shares when you’re placing an order of these types of securities, that’s the only kind of fractional purchase that you’ll be able to do. Vanguard does not offer fractional-share investing in stocks or ETFs, though the broker does allow you to reinvest dividends in stocks, ETFs and mutual funds. However, the broker will not reinvest in certain low-volume stocks, some U.S. stocks and all foreign stocks. Fractional purchases: Only in mutual funds Fractional dividend reinvestment: Yes Securities in the program: Stocks, ETFs and mutual funds SHARE: Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Robert R. Johnson, Ph.D., CFA, CAIA, is a professor of finance at Creighton University and chairman and CEO of Economic Index Associates, LLC. Related Articles