a fraction of a share or less than one whole share
Portion of a share of stock.
A fractional share of a security is a partial share. MyStockFund allows members to purchase securities in specific dollar amounts which usually results in the purchase of fractional shares. One-time Plan Purchases and AutoVest purchases feature fractional share investing. Real-time market orders are placed in whole shares only.
Less than one full share of stock. An investor may have a fractional share as the result of a dividend reinvestment program. If the amount of the dividend is not sufficient to purchase a full share of stock, the investor will be credited with a fractional share until enough dividends are received to purchase a full share. For instance, if XYZ stock issues a $1.00 dividend and the stock is trading at $10.00, a customer with dividend reinvestment will be credited a fractional share of 1/10. See: Dividend; Dividend Reinvestment Plan
Ownership in a corporation in an amount less than a full share.
If you reinvest your dividends or invest a fixed dollar amount-for example, $100 a quarter-in a stock dividend reinvestment plan (DRIP) or mutual fund, the amount may not be enough to buy a full share, or there may be money left over after buying one or more full shares. The excess amount buys a fractional share, a unit that is less than one whole share. In a DRIP, a fractional share gives you credit toward the purchase of a full share. With a mutual fund, in contrast, the fractional share is included in your account value.
Stocks amounting to less than one full share, usually resulting from splits, acquisitions, exchanges, or dividend reinvestment programs.