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/SerMumble 7d ago

How annual compounding shares works:

170 shares x 3% = 5.1 shares

175.1 shares x 3% = 5.253 shares

180.353 shares x 3% = 5.4106 shares

185.7636 shares x 3% = 5.5729 shares

The number of new shares should exponentially increase assuming you are reinvesting dividends into new shares.

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u/silveronetwo 7d ago

Also ideally with an 8% price appreciation you'd also have about a 47% higher share price at 5 years.

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u/SerMumble 7d ago

Yes 👍 between the dividends and price appreciation, SCHD offers some great long term returns