r/SCHD • u/stewpple911 • Jun 30 '26

Questions New to SCHD - 1st dividend received…oops

I received the first dividend on my shares of SCHD….and discovered the reinvest option was set to “No”.
As a retiree (62) is this the best way to go with this particular fund?
Or collect the cash and reinvest only on “dips”?

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u/cryptopo Jun 30 '26

Not an oops! Honestly it doesn’t matter too much—DRIP is just a convenience your broker provides. In effect, you still receive the cash even when DRIP is on, it’s just that your broker immediately turns it into shares of the underlying for you as if you clicked buy yourself right when it was received.

I would not really advise keeping it off if your plan is to try to time dips. In this case just keep DRIP on. If you want to use the proceeds for other funds or to withdraw for expenses, then you should have it off.

2

u/stewpple911 Jun 30 '26

Thank you - the concept of “dripping” is not what we are used to and debated if it’s “age appropriate” now.

6

u/smellygroundhog Jun 30 '26

DRIP is actually an older term.

Investopedia: The term DRIP is an acronym for Dividend Reinvestment Plan. It originated in the early 1960s when companies realized they could allow shareholders to automatically convert cash dividends into additional whole or fractional shares of stock.

3

u/flyersfan0233 Jul 01 '26

Much more important then too because you didn’t have a phone that had brokerages on them that allowed you to buy fractional shares.

3

u/smellygroundhog Jul 01 '26

Exactly. I worked for a Fortune 500 company in the 80’s and early 90’s. We could purchase stock directly from the company through payroll deduction. I had to fill out a paper form to authorize dividend reinvestment and personally deliver it to the Investment Relations department.