Learn how you can invest $1 a day with this strategy most investors tend to miss — fractional share investing!
Some of the best stocks just seem out of reach for most investors. Shares of companies like Amazon and Warren Buffett’s Berkshire Hathaway have created millionaires but cost thousands of dollars each!
In this video, I’ll show you how to buy these stocks with as little as $1, how to ride these stocks higher. I’ll share everything you need to know about fractional share investing and then reveal the top five stocks to buy with just one-dollar a day! We’re talking fractional investing today on Let’s Talk Money!
The Other Side of Stock Investing Most Investors Do Not Know
Nation, you know we love the penny stocks here on the channel. Those stocks under ” and a share with the potential to 10X your money, but there’s another side of the stock market that a lot of investors are missing!
According to data from Fidelity the median American household has $40,000 invested in the market with the average amount in each stock under $600. That means shares of Tesla are out of reach even after the split this year to make the shares cheaper. That’s an 81% annual return over the last five years that most investors just couldn’t afford. Shopify has produced a 100% annual return over the last five years…that’s DOUBLE YOUR MONEY EVERY YEAR…but how many investors can afford the thirteen-hundred per share?
This is where fractional share investing comes in, a new way to invest that opens up a whole new world to anyone and let’s you invest any amount in any stock!
I want to start with the basics of fractional share investing, how it works and how to use it to invest in thousand-dollar stocks like Amazon and Berkshire Hathaway. I’ll then reveal the five stocks I’m buying and how far your daily dollar invested can go!
I’ll be using Webull to invest in these stocks, a no-fee app that let’s you invest in fractional shares as well as options, ETFs and cryptocurrency. I love the stock simulator on Webull, a million-dollar paper portfolio tool that let’s me follow my strategies and stocks before I invest real money. Click through the link I’ll leave in the video description and you’ll get two free stocks worth up to $1000 when you open an account!
Basics of Fractional Share Investing
Fractional share investing is a great service provided by some investing apps where you can invest any amount in any stock, no matter how high the share price. For example, in the past if you wanted to buy shares of Amazon, you would have to save up the cash to buy a full share. That’s more than $3,000 sitting in your account before you could buy the stock. With fractional share investing though, you put in your order for any amount. You can invest $5 and that amount, 0.15% of a share will be put into your portfolio!
There are no extra fees on fractional share investing. Some apps restrict it to a limited number of stocks but you can find most stocks on the Webull app. The minimum investment is $5 so if you’re investing that dollar a day, you’ll have to save it up and buy your stock once a week.
Buying fractional shares is no different than buying a whole share. You’ll go into the order screen on your app and instead of putting in how many shares you want to buy, you put in how much you want to invest. You’ll get the same no-fee investing and the fraction of a share will go into your account.
Another question I get a lot about fractional shares is, “Do they pay dividends and how does that work?” And again, the answer is exactly the same as any other stock. You’ll get a fraction of the dividend according to how much of a share you own. For example, if I invest $175 for half a share of Lockheed Martin and it pays the $2.60 per share quarterly dividend. I’m going to receive a dividend payment of $1.30 for my half share.
When you want to sell your fractional shares, it works just like selling any stock. You’ll sell that fraction of a share you own and get the same share price you’d get if you had a whole share. So in that prior example, if I owned half a share of Lockheed Martin then I could sell it for $350 times one-half or $175.
5 One-Dollar a Day Stocks to Buy for Fractional Investing
Now I want to highlight five stocks for that fractional share investing strategy, five companies with shares over $250 each that you might not otherwise be able to buy.
For these picks, I looked for stocks with a share price over $250 each, those stocks perfect for fractional investing. I also screened for companies with strong sales growth over the last five years and a progressively higher operating margin. That means, not only are these companies growing their revenue but they’re getting more efficient at turning those sales into profits.
That quick screener left me with about 30 stocks from which I narrowed it down to the top five here.
Our first stock is one of my favorites for the theme, $47 billion Fortinet, ticker FTNT, at $291 a share.
The company is the only pure-play cybersecurity firm in the S&P 500 with over 500,000 customers worldwide and 1200-plus patents on its software.
Cybersecurity is one of those universal forces I’m watching over the next decade with a 10X increase in ransomware attacks just in the last year. This is the exactly the kind of theme you need to be investing in and fractional shares let’s you add a little to your portfolio every week.
Fortinet is the second largest cyber-company by revenue and has a strong advantage in its ASIC technology. That’s helped drive revenue growth of more than 20% annually since 2018 and the trend in cybersecurity should help drive demand for years.
Not only has the company grown revenue but management has improved operating profitability by more than 3% over the last three years to a 26% operating margin. That’s more than double the average margin for competitors and has helped this stock produce a 55% annualized return over the last five years.
And you can see the power of that fractional investing strategy. Investing just $1 a day over the last five years, you would have invested just over $1,200 total and hold almost 19 shares of the stock for a value of almost $5,400…that’s more than four-times your money on just $1 a day!
We’ve still got four more stocks to highlight but there are a couple of ways you can use this fractional share investing. You can save up the $1 a day and invest every five days in the same stock or invest in a different stock each week. For example, you might invest across four stocks from the list, buying $5 of one each week once a month.
You don’t hear ServiceNow, ticker NOW, in the headlines as much but the $600 stock has posted a 49% annual return for five years.
The company is a leader in IT software services serving 80% of the Fortune 500 companies with a 40% market share in its core IT service management. It’s locked in those customers with a 98% retention rate and is now expanding out into IT operations management.
The company has grown revenue by 37% annually and posted a 4.6% operating margin last year from an operating loss in 2018 so this is one just growing into its profitability years.
Investing in fractional shares, you would have more than tripled your money and built a position of more than six shares in ServiceNow in five years.
Next on our list is the big one, Amazon, ticker AMZN, at $3,300 a share is beyond the reach of most investors without that fractional strategy.
Amazon dominates its markets from ecommerce to cloud services and now streaming with Prime. The company has grown sales by 30% a year over the last five years including through last year and that’s amazing considering that means adding upwards of a hundred billion a year in revenue.
Management’s focus has always been reinvesting to grow the business but even on that strategy, the operating margin has improved to 6.6% from just over 5% in 2018. So we’re starting to see a shift to profitability that could boost earnings.
Now I’ll admit, I’ve always thought Amazon was too expensive…at $500 a share, then at a thousand, then at two thousand a share and…well, you get the point. The shares always trade well above the market on a price-to-earnings basis. Right now shares are over 50-times earnings but management is arguably the best in the world at growing the company and the shares keep heading higher. Amazon will continue to shape the world in which we live and you want to be a part of that.
Even on investing a dollar a day over the last five years, you still wouldn’t have a full share but you would have more than doubled your money. That investment of $1,258 would have bought you .8 shares worth just over $2,600 over the period.
Tesla, ticker TSLA, split its shares five-for-one last year which brought the price from over $2000 to $500 but now it’s back up to almost $800 a share.
Even the Tesla skeptics can’t deny the company is reaching a growth phase that rationalizes the stock price. Deliveries were up 121% on a year-over-year basis last quarter to 200,000 shipped and total production topped 206,000 in the three months alone, up 151% over the year.
The company doubled revenue to $12 billion last year and new factories in Texas and China will help drive growth in the years ahead. Better still, operating income quadrupled from a 5.4% operating profitability to over 11% in the quarter so we’re starting to see some real earnings generation.
Now that production growth in the EV component is what everyone is talking about but I’m more interested in robotaxis. The auto pilot program has hit snags but Tesla is actively testing with a new full self-driving beta in July and the market for robotaxis over the next five years will be huge!
Buying 16 shares of Tesla would cost you over $12,000 now but on that $1 a day fractional share strategy, you would have gotten a 10X return on your investment over the last five years.
Autodesk, ticker ADSK, at $288 a share is the industry standard for software in computer-aided design. The company provides business software in architecture, engineering and construction which means it could benefit from increased infrastructure spending over the next few years.
The company has grown revenue at a 17% annual pace and accelerated recently with 19% year-over-year growth in the first half and a 35% increase in free cash flow. Management is estimating 25% growth in the addressable market to $78 billion by 2026. That would put the current market share around 6.5% which is a strong leadership position but still leaves room for growth in share as well as that overall market growth.
Beyond the potential to continue its strong double-digit revenue growth, Autodesk has improved its operating margin from less than 1% in 2019 to 15% over the last four quarters which is a huge improvement.
Even the lowest return of the group, you still would have doubled your money investing just $1 a day in fractional shares of Autodesk for a 15% annualized return and almost nine shares of the stock.
These fractional share stocks have some great upside potential and I love the theme of investing whatever you want in a stock. If you want to buy whole shares of stock for less than $5 each though, I just did a penny stock video for that 10X potential return.
Read the Entire Stock Market Series
- The 5-Minute Fix to Your Stock Portfolio
- 5 Monthly Dividends Stocks for Retirement
- 5 Inevitable Stock Market Predictions to Invest in Now
- 3 Secrets Experts Want You to FORGET about the Stock Market
- Never Listen to Stock Market Crash Predictions | Do This Instead
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.