SCHD with DRIP Growth Calculator
Estimate the future value of your SCHD investment with dividend reinvestment (DRIP) and regular contributions.
Understanding SCHD and DRIP
The Schwab U.S. Dividend Equity ETF (SCHD) is a popular exchange-traded fund designed to track the performance of high-quality, dividend-paying U.S. companies. It's known for its focus on companies with a consistent history of paying dividends and strong fundamentals, making it an attractive option for income-focused investors.
Dividend Reinvestment Plan (DRIP) is an investment strategy where the dividends paid out by an ETF or stock are automatically used to purchase more shares or fractional shares of the same investment. This process leverages the power of compounding, as future dividends are then paid on a larger number of shares, which in turn buys even more shares, accelerating growth over time.
How the SCHD with DRIP Calculator Works
This calculator helps you project the potential growth of your SCHD investment when utilizing a Dividend Reinvestment Plan, combined with initial and regular monthly contributions. It takes into account several key factors:
- Initial Investment: The lump sum you start with.
- Monthly Contribution: The amount you plan to add to your investment regularly.
- Estimated Annual Dividend Yield: The expected percentage return from dividends each year. SCHD's yield can fluctuate, so this is an estimate.
- Estimated Annual Share Price Growth: The anticipated percentage increase in SCHD's share price each year. This is also an estimate based on historical performance and market expectations.
- Investment Horizon: The total number of years you plan to hold and contribute to the investment.
- Current SCHD Share Price: The current market price of one share of SCHD, used to determine initial share count and for dividend reinvestment calculations.
Calculation Assumptions:
- Dividends are reinvested at the beginning of each year using the share price at the start of that year.
- Monthly contributions are aggregated and invested at the beginning of each year using the share price at the start of that year.
- The estimated annual dividend yield and share price growth remain constant throughout the investment horizon. In reality, these figures will fluctuate.
- Taxes on dividends are not factored into this calculation.
- Transaction fees for buying shares are not included.
Example Scenario:
Let's say you start with an Initial Investment of $5,000 in SCHD. You plan to contribute an additional $200 each month. You estimate an Annual Dividend Yield of 3.8% and an Annual Share Price Growth of 7%. With a Current SCHD Share Price of $78.50, you want to see the outcome after 15 years.
Using these inputs, the calculator will simulate the annual growth, showing how your shares accumulate through both contributions and dividend reinvestment, and how the overall portfolio value could grow over time.