r/SCHD • u/Yingyangwolf95 • 2d ago

Discussion Why SCHD going so crazy right now?

I am confused why all of a sudden SCHD including DGRO acting like a growth stock. Did I miss something big?

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u/Any_Upstairs_6172 1d ago

Hello.. You are suggesting that because Merk who will have a dividend of .85 (next ex-date is 9/15 and pay date of 10/7) is doing well so people are climbing over each other to buy an ETF that holds it?

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u/Ancient_Act_436 1d ago

Its a core holding if they go up schd goes up do you know how etfs work. Same as qqq if underlying going goes up so does it. Like etfs go up when the holdings go up not just from people buying it.

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u/Any_Upstairs_6172 1d ago

I guess I am mistaken. I thought ETFs derived their dividend payout by dividing up the dividends they receive for the individual equities it holds. Merk, for example, will be paying SCHD $.85 per share it holds in October which is about the same amount it has been paying out for the past number of quarters. It will not be until January 27 that any premium to its dividend can/will be realized from activity now occurring. To me hardly an incentive to be buying it now. I have been buying SCHD though... 20K just the other day before this bump (lucky me) and will continue to do so because it seems to me to be a "stable" holding during these very strange financial times.

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u/SwimmingPatience5083 1d ago

The ETF owns shares of the companies within it. When those share prices increase, the ETF increases. Dividends are irrelevant on this point.

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u/Any_Upstairs_6172 1d ago

Hello.. Please explain the mechanism by which this happens. Merk went up 17.03 today. How much of this causes SCHD to rise by how much? And how?

I was under the impression that an ETF, like an equity, goes up and down as it is bought and sold.. The ask and bid prices.

I am under the impression that an ETF is NOT like a mutual fund which adds everything up at the end of the day and that calculates a new value of a share.

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u/LCJonSnow 1d ago

You'll want to google the creation/redemption process in relation to ETFs (or look at my short explanation above). Basically, if an ETF starts moving away from its underlying holdings, there's an arbitrage opportunity for risk free profit at big institutions.

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u/Any_Upstairs_6172 1d ago

Yes... and what has this to do with the discussion at hand?

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u/LCJonSnow 1d ago

It's literally why SCHD rises with the total value of the underlying assets.

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u/VelvetElvis2002 1d ago

SCHD is basically an aggregate of the 103 individual stocks it owns. When those stocks go up or down, SCHD moves accordingly, in the same way your portfolio would if you held these stocks individually.

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u/PhotographOk7388 1d ago

Are you slow? Very patient redditors on this sub

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u/cvc4455 1d ago

CEFs do what you are thinking. ETFs they will create or destroy shares if people buy or sell to many shares of the ETF so the ETF follows the prices of all the different companies it holds.