If you reinvest your dividends or invest a fixed dollar amount in a stock dividend reinvestment plan (DRIP) or mutual fund, the amount may not be enough to buy a full share.
Alternately, 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.