What are fractional shares?
A fractional share is a part of a full share. It is like dividing a pizza into 5 pieces where each piece represents 1/5th
of the pizza.
How to buy fractional shares?
Many stock brokerage companies offer fractional shares to buy for their clients. But with the help of share buying apps such as Trading 212 or Freetrade, buying them now is becoming easier every day.
Buying a fractional share on Trading 212
One of the best features that the Trading 212 app has that it lets you buy fractional shares. And as the title suggests, you can buy a fraction of a share of a company. Handy if you don’t have $3000 to buy just one share of Amazon but still willing to invest by buying the 100th part of it by paying just $30. And even if that feels expensive to invest, you can buy the 200th part of an Amazon share by paying just $15. Trading 212 lets you invest any amount or buy any fraction of a share as far as your buying price is not below £1.
How to buy a fractional share?
On the Trading 212 app, select the company you want to buy the share of and click on Buy. Now type the desired quantity of a share such as 0.1, 0.01, or 0.001, and so on. Once you are happy with the amount and the share quantity, review the order and buy it.
Can I buy a fractional share of any company?
The majority of companies on Trading 212 (Including FTSE 350, AIM, European, Swiss, and American) allow you to buy fractional shares except a few. At the time of writing two American companies that I found which do not allow fractional shares are Energizer and Wills Towers. Trading 212 app also allows you to pre-indicate if a share is fractional or not by going to Setting > Trading preference and enabling Fractional shares indicator.
Do I pay stamp duty on fractional shares?
If the share is listed under FTSE 350 then the majority of shares will incur stamp duty. However, the UK AIM market shares are exempt from stamp duty. But if you are buying shares listed on any foreign exchange, you will not have to pay UK stamp duty on them.
Dividend on fractional shares
If you have fractional shares of a company, you will receive dividends on them provided you held them on the eligible dates (Ex-dividend and Record Date). However, the amount you will receive will be proportionate to the fractional quantity of the shares. For example, if the company paid a dividend of $1.00 per share, and you held a 0.25 share, your dividend amount will be $0.25 or 1/4th.