The SCHD Inflation Calculator helps you analyze how investments in Schwab U.S. Dividend Equity ETF (SCHD) can potentially offset the effects of inflation. This tool projects your dividend income growth compared to inflation rates to show the real purchasing power of your investment over time.

Investment Details

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How much you plan to invest initially
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Additional amount you’ll invest each month
How many years you plan to keep investing
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Current price as of May 2025

Dividend & Inflation Settings

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SCHD’s recent annual dividend per share
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SCHD’s 10-year dividend CAGR is approximately 9.33%
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Historical U.S. inflation averages around 3% annually

Toggle to compare with and without dividend reinvestment

Inflation Protection Results

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Enter your investment details and click “Calculate Inflation Protection” to see results.

Live SCHD Market Data

Understanding SCHD as an Inflation Hedge

Why Consider SCHD for Inflation Protection?

SCHD (Schwab U.S. Dividend Equity ETF) is an ETF that tracks the Dow Jones U.S. Dividend 100 Index which consists of high dividend yielding stocks that have a track record of paying dividends on a regular basis. Companies that consistently increase their dividends usually have the financial stability and pricing power to withstand inflation.

While no investment can guarantee it will always beat inflation, SCHD’s historical dividend growth rate is higher than the average inflation rate, which means investors can potentially earn an increase in real income over time.

SCHD’s Historical Performance Against Inflation

Since SCHD was launched in 2011, it has demonstrated impressive dividend growth performance that generally beats inflation. The average annual dividend growth rate was 9.33 percent, which is considerably higher than the average U.S. inflation rate of about 2-3% during the same period.

This positive relationship between dividend growth and inflation makes SCHD a potentially effective method of preserving purchasing power over long periods. The compounding effects of this difference can be significant across multiple decades.

Benefits of SCHD as an Inflation Hedge

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Growing Income Stream

SCHD focuses on companies with regular dividend growth which can help investors maintain income that historically outpaces inflation.

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Quality Companies

The ETF selects companies with strong financial health and competitive advantages that can often pass inflation costs to consumers.

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Diversification

With approximately 100 holdings across different sectors, SCHD provides diversified exposure to inflation-resistant companies.

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Low Expenses

The low expense ratio of 0.06% ensures more returns stay with investors, maximizing inflation protection benefits.

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Reinvestment Option

Reinvesting dividends can amplify compounding effects, potentially resulting in even greater inflation protection over time.

Considerations and Limitations

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Market Risk

Even dividend-focused ETFs like SCHD are subject to market volatility and can lose value during market downturns.

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Dividend Growth Variability

While SCHD has historically grown dividends above inflation, future growth rates are not guaranteed and can vary.

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Inflation Spikes

During periods of unusually high inflation, even SCHD’s dividend growth might not keep pace with rapidly rising prices in the short term.

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Time Horizon

SCHD’s inflation protection tends to be more effective over longer periods when dividend growth can compound.

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Tax Considerations

Dividends are taxable in non-retirement accounts, which can reduce their effectiveness as an inflation hedge based on your tax situation.

Frequently Asked Questions

SCHD can help protect against inflation through dividend growth that exceeds inflation rates. When the companies in SCHD’s portfolio increase their dividends faster than inflation, your real (inflation-adjusted) income grows over time. This allows your investment income to maintain or even increase purchasing power despite rising prices in the broader economy.

The long-term historical average U.S. inflation rate has been around 3% annually, which serves as a reasonable baseline for long-term projections. However, you might consider using different rates based on current economic conditions or your personal expectations. For conservative planning, using a higher inflation rate (4-5%) can help ensure your strategy remains effective even if inflation exceeds historical averages.

SCHD, TIPS (Treasury Inflation-Protected Securities), and I-Bonds serve different roles in an inflation-protection strategy. TIPS and I-Bonds offer direct inflation protection backed by the government but typically provide lower total returns. SCHD offers potentially higher returns and dividend growth that may exceed inflation, but comes with greater market risk. The optimal choice depends on your time horizon, risk tolerance, and income needs.

Dividend reinvestment can significantly enhance SCHD’s inflation protection capabilities. By reinvesting dividends, you purchase additional shares that generate their own dividends, creating a compounding effect. This compounding typically accelerates your income growth well beyond inflation rates over longer time periods. Without reinvestment, you’ll still receive growing dividend income, but the compounding effect would be reduced.

The calculator provides estimates based on historical data and your input assumptions, but future results may vary significantly from projections. Actual dividend growth rates, inflation rates, and investment returns can differ from historical averages or expectations. The calculator is best used as an educational tool to understand the potential relationship between dividend growth and inflation rather than as a precise prediction of future outcomes.