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

Charles Schwab lets you buy fractional shares of stocks and exchange-traded funds (ETFs) with no minimum investment amount and no extra fees. You can own 0.5 shares, 2.75 shares, or any decimal amount — you are not locked into buying whole shares. This feature is built into the regular trading platform, not a separate account type or service.

Fractional shares work the same way as whole shares: they earn dividends (paid proportionally), they can be sold at any time during market hours, and they count toward your portfolio value. The main limitation is that you cannot use fractional shares as collateral for margin borrowing, and some advanced order types (like stop-loss orders) have restrictions on fractional positions.

Key Takeaways

  • Fractional shares are available on all stocks and most ETFs through Charles Schwab's regular brokerage account with no extra cost.
  • You can invest any dollar amount — $1, $50, $500 — and own the exact fraction of a share that amount buys at the current price.
  • Fractional shares pay dividends proportionally and can be sold during normal market hours just like whole shares.
  • You cannot use fractional shares as collateral for margin loans, and some order types do not work with fractional positions.

How fractional shares work at Schwab

When you place an order for a dollar amount rather than a share count, Schwab's system calculates how many fractional shares you receive. If you enter an order to buy $100 of a stock trading at $150 per share, you receive 0.667 shares. The trade settles in your account the next business day, just like a whole-share trade.

Fractional shares are held in your account as a decimal value. You can see them listed in your holdings with the exact quantity displayed. When you sell, you can sell the entire fractional position or a portion of it — Schwab lets you specify either a dollar amount or a share quantity on the sell side as well.

Which investments support fractional shares

Stocks and most ETFs support fractional shares at Schwab. The platform does not offer fractional shares for mutual funds, options, or bonds. Some ETFs may have restrictions depending on their structure, but the vast majority of commonly traded ETFs work with fractional orders.

If you try to place a fractional order on an investment that does not support it, Schwab will show you an error message before the trade executes. You can then choose to place a whole-share order instead or select a different investment.

Dividends and fractional shares

When a company pays a dividend, your fractional shares receive a proportional payment. If you own 0.5 shares and the dividend is $2 per share, you receive $1. Dividend payments appear in your account on the same schedule as dividends on whole shares — typically within a few business days of the ex-dividend date.

You can choose to reinvest dividends automatically through Schwab's dividend reinvestment program (DRIP), which will buy additional fractional shares with the dividend payment. This is useful if you want to compound your holdings without having to place manual trades.

Selling fractional shares

You can sell fractional shares during regular market hours (9:30 a.m. to 4 p.m. Eastern time on trading days). The sale executes at the market price at the time your order is filled, just as it would for whole shares. There is no separate process or delay for fractional sales.

If you own 2.75 shares of a stock and want to sell only 1.5 shares, you can specify that exact amount. Schwab's order entry screen lets you enter either a dollar amount or a share quantity, so you have full control over how much of your fractional position you liquidate.

Limitations and restrictions on fractional shares

Fractional shares cannot be used as collateral for margin borrowing. If you have a margin account and want to borrow against your holdings, only whole shares count toward your buying power. This does not prevent you from holding fractional shares — it just means they do not contribute to your margin capacity.

Some order types do not work with fractional shares. Stop-loss orders, stop-limit orders, and trailing stop orders are restricted or unavailable for fractional positions. You can place market orders and limit orders on fractional shares without issue. If you need to use an advanced order type, you may need to hold whole shares or use a different strategy.

Why use fractional shares

Fractional shares remove the barrier of share price. A stock trading at $500 per share is now accessible with a $50 investment instead of requiring $500. This makes it easier to build a diversified portfolio with a small amount of money and to invest consistent dollar amounts across multiple holdings.

Fractional shares also simplify dollar-cost averaging — a strategy where you invest the same dollar amount at regular intervals. Instead of waiting to accumulate enough cash to buy a whole share, you can invest $100 every month and own whatever fractional amount that buys, regardless of the stock price.

Frequently Asked Questions

Do I pay extra fees to buy fractional shares at Schwab?

No. Fractional share trades have the same commission structure as whole-share trades. Since Schwab does not charge commissions on stock and ETF trades, fractional shares are also commission-free.

Can I set a stop-loss order on fractional shares?

Stop-loss and stop-limit orders are not available for fractional positions at Schwab. You can place market and limit orders on fractional shares. If you need a stop order, you would need to hold whole shares or monitor the position manually.

What happens to fractional shares if I transfer my account to another broker?

When you transfer your account, fractional shares are typically liquidated and the cash value is transferred instead. The receiving broker may not support fractional shares in the same way, so Schwab converts them to cash to avoid complications. Check with your new broker about their fractional share policy before transferring.

Do fractional shares have voting rights?

Fractional shares do not carry voting rights. Only whole shares may have access to you to vote on shareholder matters. If you own 0.5 shares, you cannot vote; if you own 1.5 shares, you can vote based on the 1 whole share, but the 0.5 fractional share does not count.