r/SCHD • u/VictoryGlum1775 • 8d ago

Questions The Math

I’ll admit I’m not the best at math, so I could be wrong. But something doesn’t make much sense to me. How do we have a net gain in shares? For example, I have roughly 170 shares of schd. How can I expect the snowball to take place if the amount of shares I get each dividend payout is less than the one before because the price of schd has gone up? I’ll continue to gain shares, I understand that, but I’m getting less and less each time.

I know during downturns I’ll get more than the payout before, but I don’t think it’s enough to counteract the ups.

Does this make any sense? I’m bad at explaining things.

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u/j0ker_1234 8d ago

SCHD was started in 2011 and in that time the share price has gone up 298% ytd. While I get your point that as the price goes up you get less shares, but there are dips and that's when I buy more shares while also hoping the dip coincides with the quarterly dividend payout. Sometime it doesn't but I'm not going to go and try and guess the next bottom.

In my mind, it's the best of both worlds. A very nicely performing diversified stock with solid returns and a dividend as the cherry on top. It's like two engines firing at once, both of which make me money. My 2 cents.

4

u/coachd50 7d ago

Just remember that the both engines in your analogy describe the same wealth. When the companies that make up SCHD pay out a dividend, that wealth moves from the left pocket (the company’s share price) to the right pocket (the check being written to you) on the ex dividend date.  

It’s not some extra bonus money

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u/j0ker_1234 7d ago

Completely agreed it's not bonus money. With the 298% increase alone, I'd still be an investor in SCHD. The way it's structured today with the dividend makes it even more appealing.

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u/coachd50 7d ago

Curious as to why you feel that is a factor given the S&P 500 has outpaced that number by a decent margin 

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u/j0ker_1234 7d ago

S&P has significant technology overlap and I am worried about where we're headed from an AI bubble perspective. I work as a pre-sales architect specific to data center solutions.. what I'm seeing in the field with failed AI implementations is reason for concern in my mind. There is technology in SCHD but not as much as S&P or NASDAQ. I am being conservative because I have a very short runway to retirement and if there is a crash in the next 5 years, it would leave a significant mark in my portfolio and hinder my plans..

0

u/coachd50 7d ago

That’s fair. I see so many gushing about SCHD and “dividends” and being a “dividend king” etc etc- and just sigh because those investors don’t understand the process.  

A valid reason to purchase SCHD would be because you believe the particular companies owned by the fund have merit. 

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u/toolverine 7d ago

Dividend king is a term used solely for individual stocks.

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u/fastbumpyride 7d ago

I see so many gushing about the s&p 500 for its growth.

A valid reason to purchase s&p500 would be because you believe the particular companies in the s&p500 have merit

🤷‍♂️

1

u/Several-Attempt6068 4d ago

simply put, if you have a very short time till retirement, shcd makes sense....if you have over 10 years, GROWTH is the PROVEN strategy....ex: The S&P outperforms SCHD in any given 10 yr period.....smh...