Fractional Shares: Why It’s in the News
There's a new kid on the investing block that's making headlines. It's the practice of buying fractional shares of stock to build high-quality, diversified portfolios with a lower upfront cost.
A fractional share is a partial share of stock -- for example, one-half or one-third of a share. Fractional shares themselves aren't new. They occasionally turn up in investment portfolios, due to stock splits, mergers, or dividend reinvestment programs. You might own 19 shares of a stock that splits 3-for-2, for example. After the split, you'll have 28.5 shares. That one-half of a share functions like a smaller version of a whole share; it's worth 50% less and earns half the dividends, too.
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Source Fool.com
