Fractional shares

A fractional share represents a partial unit (i.e., less than one whole share) of ownership in a share of a security or unit of an Exchange Traded Product (ETP), including Exchange Traded Funds (ETF) and Exchange Traded Notes (ETN). Learn more

Yes, E*TRADE now offers fractional shares in listed Reg-NMS securities, excluding any listed Reg-NMS securities that may be restricted for regulatory or other reasons. For eligible listed Reg-NMS securities, you may place a buy or buy to cover order for any decimal quantity up to 3 decimals, with a minimum notional amount of $5.00. The direct purchase of fractional shares in non-NMS listed and over-the-counter (OTC) securities is not permitted on E*TRADE’s platforms at this time.

Fractional shares can help you:

• Get started with smaller amounts rather than waiting until you can afford a full share.
• Diversify more easily by allocating a set amount across multiple stocks/ETFs instead of concentrating in one position.
• Invest more consistently by putting the same dollar amount to work over time (often called dollar-cost averaging).

• Fractional share trading will be introduced for a pilot group of securities beginning with the S&P 100® and expanding with additional subsequent waves. Once fully released, it will be available for most Reg-NMS listed securities (but not OTC securities).
• BRK.A as well as MS common and preferred stocks will not be available. Additional securities may also be restricted, and eligibility can change at any time.

• Dividends: If the stock or ETF pays a dividend, fractional shareholders typically receive a proportional dividend based on the fraction owned (for example, 0.5 shares generally receives about half the dividend of 1 share), subject to the broker’s processing and any rounding conventions.
• Voting and corporate actions: You will generally be able to participate in mandatory corporate actions proportionate to your interest, including stock splits, mergers, and spin-offs. Fractional shares, however, may not be eligible to participate in voluntary corporate actions such as tender offers and certain rights offerings. In general, holders of fractional shares may proportionately vote their fractional share interests for proxy voting

• Not every security may be eligible for fractional share investing, and it is possible that eligibility could change. This means that it is possible (although rare) that you could purchase a fractional share that you are unable to sell later.
• Transferability: In some cases, fractional shares may not transfer “in kind” between brokerages the same way whole shares do (you may need to liquidate the fractional portion).
• Trading flexibility: Certain trading features may be limited for fractional positions depending on the security and the program (for example, how orders are placed or how certain corporate actions are processed).
• Long-term fit: Fractional shares can be a helpful tool, but they don’t change the underlying investment risk—prices can still go up or down, and diversification does not guarantee a profit or protect against loss.

Not yet but coming in the near future.

A Dividend Reinvestment Program (DRIP) is a feature that automatically uses eligible dividends paid by a stock or ETF you own to buy additional shares of that same investment—often including fractional shares when the dividend amount doesn’t equal a full share price.³

It can. Because dividend payments are often smaller than the price of one share, reinvesting dividends commonly results in fractional shares—so more of the dividend gets put back to work.