Yes, Charles Schwab offers fractional shares through its standard brokerage account

Charles Schwab allows you to buy fractional shares of stocks and exchange-traded funds (ETFs) with no minimum investment and no additional fees. You can purchase any dollar amount — $1, $50, $500 — rather than being forced to buy whole shares at their current price. This feature is built into Schwab's regular trading platform and available to all account types.

Fractional shares let you own a piece of an expensive stock. If a stock costs $300 per share and you have $100 to invest, you can buy 0.33 shares instead of waiting to save $300. The same applies to ETFs. You pay no commission on fractional share purchases, and Schwab does not charge a separate fee to hold them.

Key Takeaways

  • Fractional shares are available on all stocks and most ETFs through Schwab's standard brokerage account with no extra cost.
  • You can invest any dollar amount, not just whole-share increments, and there is no minimum purchase required.
  • Fractional shares appear in your account the same way whole shares do and can be sold at any time during market hours.
  • Dividend payments on fractional shares are calculated proportionally — if you own 0.5 shares and the dividend is $2 per share, you receive $1.
  • Some mutual funds and certain restricted securities cannot be purchased as fractional shares through Schwab.

How to buy fractional shares on Schwab's platform

Open your Schwab account and go to the Trade tab. Search for the stock or ETF ticker you want to buy. Instead of entering a number of shares, enter a dollar amount in the "Invest" field. Schwab will show you exactly how many fractional shares that dollar amount will purchase at the current market price.

Review the order details — the ticker, the dollar amount, the number of shares (including decimals), and the estimated cost. Place the order during market hours (9:30 a.m. to 4 p.m. Eastern time for stocks). The fractional shares will settle in your account the next business day, just like whole shares.

If you prefer, you can still buy whole shares the traditional way by entering a share quantity instead of a dollar amount. Schwab lets you choose whichever method fits your situation.

What happens to fractional shares when you sell or transfer accounts

You can sell fractional shares at any time the market is open. Place a sell order for the exact number of shares you own — Schwab's system accepts decimal amounts. The sale executes at the market price for that moment, and the cash appears in your account the next business day.

If you transfer your Schwab account to another brokerage, fractional shares transfer along with whole shares. The receiving firm must support fractional shares for the transfer to go through without forcing you to sell first. Most major brokerages now accept fractional share transfers, but confirm with your new firm before initiating the move.

Dividends and voting rights on fractional shares

When a company pays a dividend, Schwab calculates your payment based on the exact number of shares you own. If you own 2.75 shares of a stock that pays a $4 annual dividend per share, you receive $11 (2.75 × $4). The dividend is paid in cash and deposited to your account on the payment date.

Fractional shares carry voting rights proportional to your ownership. If a company holds a shareholder vote and you own 0.5 shares, you can cast 0.5 votes on each proposal. Schwab sends voting materials to all shareholders, including those holding fractional shares.

Restrictions and securities you cannot buy as fractional shares

Most stocks and ETFs can be purchased as fractional shares, but some securities are excluded. Mutual funds cannot be bought as fractional shares — you must buy whole shares or dollar amounts that result in whole shares. Certain restricted or delisted securities also may not be available for fractional purchase.

Options, bonds, and futures are not available as fractional purchases on Schwab. If you want to invest a small amount in these products, you will need to meet the minimum requirements for whole contracts or bonds.

Comparing Schwab fractional shares to other brokerages

Schwab's fractional share offering is comparable to competitors like Fidelity and E*TRADE, which also allow fractional purchases with no minimum or extra fees. The main difference is in which securities are supported — some brokerages restrict fractional purchases to stocks only, while Schwab includes most ETFs. Robinhood and some other platforms also offer fractional shares, though their account features and fee structures differ from Schwab's.

If fractional shares are important to your investing strategy, check whether your current or prospective brokerage supports them and whether there are any restrictions on the specific securities you want to buy.

Tax reporting for fractional shares

Fractional shares are reported on your tax forms the same way whole shares are. When you sell fractional shares, Schwab reports the sale on Form 1099-B, which shows your proceeds and cost basis. Your gain or loss is calculated based on the exact number of shares sold, including decimals.

If you hold fractional shares in a taxable account and receive dividends, those dividends appear on Form 1099-DIV. Keep records of your fractional share purchases and sales for your tax records, especially if you buy and sell frequently.

Frequently Asked Questions

Can I set up automatic investments in fractional shares?

Yes. Schwab's Automatic Investment Plan (AIP) lets you invest a fixed dollar amount on a schedule — weekly, monthly, or quarterly — in any stock or ETF. The system automatically purchases fractional shares to match your dollar amount, making it straightforward to invest small sums regularly without worrying about share prices.

What if the stock price changes between when I place my order and when it executes?

Fractional share orders execute at the market price at the time of execution, just like whole share orders. If you place an order during market hours, it executes when ready at the current price. If you place an order after hours, it executes at the next market open. You can set a limit price to control the maximum you will pay.

Do I pay taxes on fractional shares differently than whole shares?

No. Fractional shares are taxed the same way as whole shares. When you sell, your gain or loss is based on the sale price minus your cost basis. Dividends are taxed as ordinary income. The only difference is that your numbers include decimals on your tax forms.

Can I inherit fractional shares in a Schwab account?

Yes. If a Schwab account is transferred to a beneficiary or estate, fractional shares transfer along with whole shares. The beneficiary can hold, sell, or continue to add to the fractional position just as the original owner could.

What happens if a stock splits and I own fractional shares?

Your fractional shares adjust automatically. If you own 0.5 shares of a stock that splits 2-for-1, you will own 1 share after the split. Schwab handles all split adjustments without any action on your part.