What it is
Fractional shares enable investors to own a piece of a company's stock, even if they cannot afford the full price of one share. Instead of buying, for example, one share of a $1,000 stock, an investor could buy $100 worth, owning 0.1 of a share. This makes investing in high-priced stocks more accessible and allows for more precise portfolio diversification with smaller capital.
The rise of retail trading apps has made fractional shares a common feature, democratizing access to expensive stocks like those in the Magnificent Seven. News often covers how these offerings lower barriers to entry for new investors and enable easier portfolio diversification. They are also relevant when discussing dividend reinvestment plans, where fractional shares can be automatically purchased with dividend payouts.
Why it matters
Fractional shares make investing in expensive stocks affordable and allow for greater portfolio diversification, even with limited capital.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice