The quick answer is sort-of. Older toddlers can definitely fingerspell. Babies and young toddlers can certainly dabble. And by dabble I mean that they can do finger spelling approximations.
If you do decide to introduce fingerspelling, don’t expect too much. For example, my son picked up the sign for T.V. (fingerspelled “T “ and “V”) as my wife would use it keep him still while doing diaper changes – at one point he thought it was funny to turn and bolt before all was done. Just for kicks she’d finger spell T.V. each time. Well one time my wife forgot to turn it on and my son actually did his approximation of the sign by moving his fingers.
Now I’m sure to him, it was pretty close, but it basically appeared as a few fingers held up and moved a few times. This is pretty typical for a 12-month-old right up until 2.5 and 3 where you might begin to experience some better manual coordination. This is really what fingerspelling comes down to. It takes a lot of muscular coordination and memory power to keep all the letters straight. However, as your toddler begins to speak, he’s demonstrating his ability to control his body more specifically. Speaking actually requires a lot of effort and control of many different facets. So once your baby is fairly proficient at speaking, you can consider introducing finger spelling. Think too about the huge amount of brain power to remember the letters and the sequence – not an easy feat.
What is great for toddlers is teaching them the alphabet by using the manual alphabet. This helps your baby “see” the individual letters. In fact, this is how my son learned to say the letters as it was part of my son’s bedtime/bath routine. Eventually, he would be able to say the letters as my wife signed them.
As your child ages and replaces many signed words with spoken words, fingerspelling might be one of the few remaining skills they retain. This is when learning to read will be greatly assisted.
I guess the take-away message is to introduce fingerspelling if it suites you, but don’t expect much in return. If you’re concerned about getting the biggest bang for your buck, then just fingerspell the alphabet and save spelling words for a bit later on.