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

Charles Schwab lets you buy fractional shares — pieces of a single stock — starting at $1. You do not need a minimum account balance or special account type. When you place an order, you can enter a dollar amount instead of a share count, and Schwab will buy the fractional portion for you.

Fractional shares trade during regular market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). They are held in your account the same way whole shares are, and you receive dividends on the fractional amount you own. You can sell fractional shares anytime the market is open, just as you would whole shares.

This feature is available on Schwab's web platform and mobile app at no extra cost. There are no fractional-share-specific fees — you pay Schwab's standard commission structure, which is zero commission on stocks and exchange-traded funds (ETFs).

Key Takeaways

  • You can buy fractional shares at Charles Schwab for as little as $1 per order with no minimum account balance required.
  • Fractional shares trade during regular market hours and pay dividends on the fractional amount you own.
  • Schwab charges no commission on fractional share trades, the same as whole share trades.
  • You enter a dollar amount instead of a share count when buying fractional shares through the web or mobile app.

How to place a fractional share order on Schwab

Log into your Schwab account on the web or open the Schwab mobile app. Search for the stock or ETF you want to buy by ticker symbol or company name.

When the quote page opens, look for the "Trade" or "Buy" button. Click it to open the order form. Instead of entering a number of shares, select the option to enter a dollar amount. Type the dollar amount you want to invest — Schwab will calculate how many fractional shares that buys at the current price.

Review the order details, including the estimated number of shares and fractional amount. Confirm the order. Schwab will execute it during the next available market window if you place it during market hours, or at the market open the next trading day if you place it after hours.

What happens to fractional shares when you sell or transfer

You can sell fractional shares anytime during market hours. The process is identical to selling whole shares — search for the holding, click "Sell," enter the number of shares or dollar amount, and confirm. Schwab will execute the sale at the market price at that moment.

If you transfer your account to another brokerage, Schwab will transfer fractional shares as fractional shares. The receiving firm must also support fractional shares for the transfer to go through without forcing you to sell first. Before you initiate a transfer, contact the new brokerage to confirm they accept fractional shares in the specific securities you hold.

If you inherit a Schwab account that contains fractional shares, those shares remain fractional in the inherited account. You can hold them, sell them, or buy more fractional shares of the same security.

Fractional shares and dividend reinvestment

If you enroll in Schwab's Dividend Reinvestment Plan (DRIP), dividends from fractional shares are automatically reinvested to buy more fractional shares of the same stock. This happens at no commission and uses the closing price on the dividend payment date.

You do not have to use DRIP. If you turn it off, dividends from fractional shares are deposited to your cash balance as usual. You can then use that cash to buy fractional shares of any security, or hold it for other purposes.

Fractional shares in retirement accounts

Fractional shares are available in Charles Schwab IRAs, Roth IRAs, SEP IRAs, and other retirement account types. The same $1 minimum applies. Dividends and capital gains in retirement accounts are not taxed in the year they occur — they grow tax-deferred until you withdraw money in retirement.

When you reach age 73, you must begin taking Required Minimum Distributions (RMDs) from traditional IRAs and SEP IRAs. Schwab will calculate your RMD based on the total value of your fractional and whole shares combined. You can satisfy the RMD by selling fractional shares, whole shares, or a combination of both.

Risks and limitations of fractional shares

Fractional shares carry the same market risk as whole shares — the price can go up or down. If you buy a fractional share and the stock price falls, your investment loses value. There is no protection against loss.

Fractional shares may have slightly wider bid-ask spreads (the difference between the buy and sell price) than whole shares during low-volume periods, which can cost you a few cents on small orders. This is most noticeable with less-traded stocks.

Some corporate actions — like stock splits, mergers, or special dividends — can affect fractional shares differently than whole shares. Schwab handles these automatically, but the outcome may differ slightly from what you expect. Contact Schwab if you have questions about how a specific corporate action will affect your fractional holdings.

Frequently Asked Questions

Can I buy fractional shares of ETFs at Schwab?

Yes. Fractional shares work the same way for ETFs as they do for stocks. You can buy as little as $1 worth of any ETF Schwab offers, and there is no commission. Dividends from fractional ETF shares are reinvested or paid to cash depending on your DRIP settings.

What is the smallest fractional share order I can place?

Charles Schwab allows orders as small as $1. If a stock trades at $100 per share, a $1 order buys you 0.01 shares. There is no minimum share count, only a minimum dollar amount.

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, you report the gain or loss based on the sale price minus your cost basis. Dividends from fractional shares are taxable income in the year received, unless the shares are in a tax-advantaged account like an IRA.

Can I set up automatic investments in fractional shares?

Yes. Schwab's Automatic Investment Plan (AIP) lets you schedule regular purchases of stocks or ETFs in dollar amounts. The system buys fractional shares if needed to match your dollar target. You can set this up for weekly, bi-weekly, or monthly purchases.

What happens to fractional shares if Schwab goes out of business?

Your fractional shares are protected by the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 per account type at a failed brokerage. Fractional shares count toward this limit the same way whole shares do, based on their market value at the time of the firm's failure.