Modeling SCHD's dividend growth, in TypeScript
SCHD (Schwab's U.S. Dividend Equity ETF) shows up on every "best dividend ETF" list, but rarely for the reason that actually matters: its dividend grows . The starting yield is modest — somewhere in the 3–4% neighborhood — yet SCHD has raised its dividend on the order of ~10–12% per year over its life. That's the whole game. A flat 6% yield pinned to a share count that never moves eventually gets…
Schwab's U.S. Dividend Equity ETF (SCHD) is often featured on best dividend ETF lists, but its standout feature is its consistent dividend growth. While the initial yield is modest, around 3-4%, SCHD has increased its dividend annually by approximately 10-12%. This growth, combined with a share count that remains stable, eventually outpaces a flat yield on a non-growing share count.
To better understand this concept, a dedicated SCHD dividend calculator was created using a TypeScript library called dividend-math. The core of this calculator is a single pure function named dripCalculator, which simulates the dividend growth process year by year. It takes into account the current yield, share count, price, dividend growth rate, price growth rate, and the number of years to simulate.
The model incorporates the key factors that contribute to SCHD's success. First, it starts with a modest yield and then focuses on the significant annual dividend growth rate. Each reinvestment of dividends purchases additional shares, which in turn generate more dividends. This compounding effect is what truly drives the value of the investment over time, rather than the initial yield alone.
Interestingly, the calculator also incorporates the yield and payout ratio, which provides insight into the sustainability of the dividend. A high yield might seem attractive, but if the underlying payout is not reliable, it could be worse than a lower yield that is more trustworthy. By combining yield with the payout ratio, one can identify ETFs with both attractive returns and reliable dividends.
The dividend-math library, which includes the dripCalculator function, is open-source and can be found on GitHub (link provided). It is designed to be a single source of truth across various calculator pages, ensuring consistency in the calculations. The library is available for use in projects through npm (npm install dividend-math).
It is important to note that this post is focused on the mathematical modeling of dividend growth and not on providing financial advice. Dividends are not guaranteed, and past performance does not guarantee future results. The calculator is meant to help users model different scenarios and make informed decisions, but it should not be used as the sole basis for investment choices.
Written by urgent.news from Dev.to's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
