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How to Use the SCHD Calculator
- Enter Your Investment Plan: Input your initial investment amount, how much you plan to contribute monthly, and for how many years.
- Set Growth Assumptions: Enter your estimated annual growth rate for SCHD's share price and its dividend payments. Historical averages can be a good starting point.
- Choose Reinvestment: Decide if you want to automatically reinvest the dividends you receive. Reinvesting is a key driver of long-term compound growth.
- Calculate: See a projection of your investment's total value, your total contributions, and your estimated annual dividend income at the end of the period.
What is SCHD and Why is It Popular?
SCHD, or the Schwab U.S. Dividend Equity ETF™, is an Exchange-Traded Fund that tracks the Dow Jones U.S. Dividend 100™ Index. This index is composed of high-quality, large-cap U.S. companies with a strong record of paying dividends.
Its popularity stems from its focus on both **dividend yield** and **dividend growth**. Unlike funds that only chase the highest current yield, SCHD's methodology selects companies that are not only profitable but also have a history of consistently increasing their dividend payments. This combination makes it a cornerstone for many long-term dividend growth investors.
Frequently Asked Questions (FAQ)
What are realistic growth rates to use?
Historically, the S&P 500 has provided a long-term average annual return (including price appreciation and dividends) of around 10%. SCHD, being composed of large, stable companies, might have a slightly different profile. A common approach is to use a 7-9% estimate for share price growth and a 3-6% estimate for dividend growth. These are just estimates; past performance does not guarantee future results.
What is "dividend reinvestment" (DRIP)?
DRIP stands for Dividend Reinvestment Plan. When you enable it, any cash dividends you receive from your SCHD shares are automatically used to buy more shares of SCHD. This process creates a powerful compounding effect, as your new shares will then generate their own dividends in the future, accelerating the growth of your investment.