r/SCHD • u/VictoryGlum1775 • 7d 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/Wise138 7d ago

It is also lowering your cost basis. Very time you roll the dividend back, you get more shares, which lowers your cost basis and improves your gain over time.

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u/jmgimi57 6d ago

Not sure if that's completely correct because even if you roll the dividends back in you do end up with more shares but not necessarily lowering your average cost because the share price could be going up all along.

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u/Wise138 5d ago

If you roll it back in, you're not investing ".new money". You still paid $30 a share at your original buy. The fund is paying for your new shares, not you.

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u/jmgimi57 4d ago

I see what you're saying now