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I would like to give my grandchildren ... stock instead of toys. However, I am thinking in terms of $50. presents.

You could start a DRIP (dividend reinvestment plan) for them with one share of stock and then add to it for future gifts. It would be a bit more than the cost of one share to set it up because of fees, so the first gift may be more than $50, but then you can add to it in amounts that aren't whole shares. See the DRIP board for more info on which stocks are available for this, etc.

I would appreciate suggestions--if stock is not a good idea, what would be a good one?

Stock is a great idea!

I gather there are tax implications nowadays re: children's bank accounts.

Yes, they are liable for tax on the dividends, but unless they have a lot of money besides this, or are employed, they won't owe any tax because the amount earned is too small. They'll also need to keep track of what was paid for the stock so they can pay capital gains when they sell it.
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