Do I get dividends on fractional shares?

Do I get dividends on fractional shares?

Yes, you do receive dividends on fractional shares. Here’s how it works:

1. Dividend Allocation:

·        When a company declares a dividend, it is typically distributed based on the number of shares you own. If you hold fractional shares, the dividend is proportionally allocated to your fractional holdings.

2. Payment Calculation:

·        For example, if a company declares a dividend of $1 per share and you own 0.5 fractional shares, you would receive $0.50 in dividends.

3. Distribution Process:

·        The dividends on fractional shares are collected by the broker and then credited to your account. The amount is typically deposited into your cash balance or reinvested according to your account settings.

4. Tax Implications:

·        Dividends from fractional shares are subject to the same tax treatment as dividends from full shares. In the US, dividends are taxed at a flat rate, and you can claim any foreign tax credits in India if applicable, as per the Double Taxation Avoidance Agreement (DTAA).

Fractional shares enable you to receive dividend payments in proportion to your holdings, making it easier to benefit from dividend-paying investments without needing to buy whole shares.


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