As competition among stock brokers has intensified, online gamers have rushed to offer new features to their clients, including the ability to invest in fractions of shares. This feature allows investors to buy a stock or ETF with almost any amount of money rather than having enough money to buy a full stock. It’s perfect for high-priced flagship stocks like Alphabet and Amazon.

The possibility of buying fractional shares is very attractive, especially for novice investors. You can invest with a much smaller amount of money, and with some stocks selling for thousands of dollars per share, you can buy what you can afford. With this feature it is much easier to use the average dollar cost especially now that the major online brokers have reduced their transaction fees to zero.

But while some brokers have just started allowing investors to buy fractional shares, others have allowed them to do so indirectly as part of dividend reinvestment plans for many years. This is the case even though brokers did not offer fractional share trading. This division still exists today, with some brokers offering fractional shares via dividend reinvestment, but not otherwise.

With dividend reinvestment plans, you can only buy the stocks that made the payout, and none of the others. Of course, now with no trading commissions at all of the major online brokerage houses, you can reinvest the money yourself at no additional cost except a bit of your time.

Below Bankrate highlights the online stock brokers that allow fractions of shares to be traded and outlines the key details of each broker’s program and offering.

The best brokers for investing in fractional stocks:

Overview: The Best Online Brokers For Investing In Fractions Of Shares In November 2021

Charles Schwab

Charles Schwab has long been an investor-focused company, and in 2020 it offered another benefit to investors, allowing them to buy a fraction of any stock in any Standard & Poor’s 500 index. 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 as with common stock trades, you will be able to complete your trades without a trading commission. You will continue to be able to reinvest all dividends from your stocks in fractional shares of the same stock.

Split purchases: Yes

Split reinvestment of dividends: Yes

Titles on the program: ~ 500, including all S&P 500 stocks

Fidelity Investments

Fidelity is regularly a top competitor among brokerage houses and, unsurprisingly, offers a way to buy fractional shares, which it calls Stocks by the Slice. You can start with just $ 1 and buy stocks of over 7,000 stocks and ETFs listed on the US stock exchanges. You will still be able to buy stocks without any trading commission, and you will also be able to reinvest your dividends in more stocks, even fractional stocks, whether stocks or ETFs.

Split purchases: Yes

Split reinvestment of dividends: Yes

Titles on the program: Over 7,000 stocks and ETFs

Interactive brokers

Long known as a powerful alternative for professional and active traders, Interactive Brokers also offers fractional shares, which is a godsend for investors without those deep pockets. You can buy fractional shares on the broker’s Pro platform (cost: $ 1 or at the broker’s laddered rate) or on their Lite platform, where trading is free. However, only stocks with an average daily volume of $ 10 million or a market cap above $ 400 million are eligible for the program. Also eligible: ETFs as well as foreign equities traded as American certificates of deposit (ADR).

Split purchases: Yes

Split reinvestment of dividends: No

Titles on the program: More than 9,000 shares, ETFs and ADRs

Robin Hood

Robinhood has long been known for its commission-free trading (which also extends to options), but it also allows you to buy the smallest fraction of a stock. Yes, you can buy as little as a millionth of a share of your favorite stocks, and you can buy a wide variety of stocks as well. Stocks trading at more than $ 1 per share and with a market capitalization greater than $ 25 million are eligible for the program and ETFs are also available for fractional shares. You can also reinvest dividends in fractional shares, but must first activate the fractional function.

Split purchases: Yes

Split reinvestment of dividends: Yes

Titles on the program: ETFs and stocks above volume and size thresholds

TD Ameritrade

TD Ameritrade does not offer split stock purchases, but that won’t matter for a long time to come, as the broker has now been officially acquired by Charles Schwab. However, the broker will always open new accounts until it is officially integrated with Schwab at the end of next year or the following year. TD allows you to reinvest any dividends you receive in new shares of that company. You are therefore always able to reinvest your entire dividend and increase your earnings.

Split purchases: No

Split reinvestment of dividends: Yes

Titles on the program: Over 5,000 stocks as well as ETFs and mutual funds

E-commerce

E-Trade is another broker that has been acquired (by Morgan Stanley), but the broker intends to continue under its own banner. The broker does not offer fractional share purchases, but allows investors to reinvest their dividends in fractional shares. E-Trade will only reinvest dividends in a stock or ETF that trades above $ 5 per share.

Split purchases: No

Split reinvestment of dividends: Yes

Titles on the program: Thousands of stocks and ETFs

Edge Merrill

Merrill Edge is another broker that allows reinvestment of dividends in fractional shares but does not allow clients to directly purchase fractional shares. Merrill allows investors to reinvest dividends from stocks and ETFs as well as mutual funds. You can quickly determine if you want every security in your portfolio to be reinvested with an online selection, and if you change your mind, you can change your choice later just as easily.

Split purchases: No

Split reinvestment of dividends: Yes

Titles on the program: Thousands of stocks, ETFs and mutual funds

Avant-garde

Vanguard is well known for its mutual funds and ETFs, and although you can buy fractional shares when you place an order for these types of securities, it is the only type of fractional purchase you will be able to make. . Vanguard does not offer investing in stocks or ETFs, although 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, certain US stocks and all foreign stocks.

Split purchases: Only in mutual funds

Split reinvestment of dividends: Yes

Titles on the program: Stocks, ETFs and mutual funds

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