A dividend received at year-end has not earned a full year of cash interest.
Two assumed $300 year-end receipts accumulate to $606 at an assumed 2% annual cash rate. Crediting each receipt before a full interest step instead produces $618.12. The $12.12 difference comes from the ordering convention, not a better investment or a verified SCHD payout.
The annual rate is 2 ÷ 100 = 0.02, selected for this exercise. The $300 receipts are also chosen inputs. There is no actual deposit rate, broker policy or SCHD payment date in this worksheet. It isolates when cash starts participating in the model's interest calculation.
Put each receipt on the timeline
Start with zero cash at time zero. At the end of the first annual interval, interest on that opening zero is zero; then receive $300. The cash account closes the first interval at $300. During the second interval, that $300 earns $6. The second $300 receipt arrives at the end, giving $300 + $6 + $300 = $606.
The second receipt is present at the closing instant but has not been held through that second interval. Including it in that interval's interest base would grant it time it did not have. In this simple convention, its first possible full interest interval comes after the displayed horizon. Actual daily accrual or payment delays require a dated model and the account's terms.
Compare the two recurrences
For a period-end receipt, next cash = opening cash × (1 + c) + D. For a receipt credited before the interest step, next cash = (opening cash + D) × (1 + c). Here D is the fixed receipt and c is the selected interest rate. Neither expression is inherently broken; they describe different ordering assumptions.
The receipt-before-interest version gives ($0 + $300) × 1.02 = $306 after one step, then ($306 + $300) × 1.02 = $618.12 after two. The year-end version gives $300 and $606. Their closing difference is $618.12 − $606 = $12.12, comprising an extra $6 on the first receipt, another $6 on the second, and $0.12 interest on the first extra $6.
Check the same result without the loop: year-end cash = $300 × 1.02 + $300 = $606. Receipt-before-interest cash = $300 × 1.02² + $300 × 1.02 = $618.12. Our exact-fraction calculation and decimal event replay agree. A zero cash rate removes the ordering difference, because no receipt earns interest under either convention.
| Ordering | Step | Opening cash | Receipt | Interest base | Interest | Closing cash |
|---|---|---|---|---|---|---|
| end | 1 | 0 | 300 | 0 | 0.00 | 300.00 |
| end | 2 | 300.00 | 300 | 300.00 | 6.0000 | 606.0000 |
| before | 1 | 0 | 300 | 300 | 6.00 | 306.00 |
| before | 2 | 306.00 | 300 | 606.00 | 12.1200 | 618.1200 |
Download all event rows · Download boundary inputs and expected outputs
Why this changes a DRIP comparison
To connect this timing test with our earlier fixture, assume a separate $10,000 investment produces the $300 annual receipts with no price growth or additions. Keeping cash outside the investment gives a total of $10,000 + $606 = $10,606 under year-end receipt timing. The receipt-before-interest total is $10,618.12.
A separate annual-step DRIP model at an assumed 3% rate gives $10,000 × 1.03² = $10,609. Compared with that number, year-end cash is $3 lower; the receipt-before-interest convention is $9.12 higher. The apparent winner changes even though the input rates do not. This is why a comparison must state its timeline before anyone interprets the ending balances.
The earlier retained-cash sensitivity page uses the receipt-before-interest equation. Its $618.12 calculation remains the result of that stated equation. It must not be interpreted as the interest earned by two actual year-end cash receipts. Neither page establishes which path an investor should choose.
Boundary checks that expose ordering errors
One year-end step returns $300, while one receipt-before-interest step returns $306. Those first-step tests expose the timing assumption faster than a long forecast. With zero interest, two $300 receipts total $600. Zero receipts leave cash at zero, and zero elapsed steps also leave the initially empty cash account unchanged.
A missing rate produces an explicit missing-input status and a blank output in the test file. It is not converted to a known zero rate. Negative receipts are rejected because this worksheet describes incoming dividends, not withdrawals. The CSV records the ordering label on every row so that moving the interest operation cannot silently change the meaning of the result.
Can I use SCHD's actual quarterly payments?
Not by relabeling these annual model steps. Use dated receipts, verify the time cash was available, and apply the relevant account terms. This page supplies neither current rates nor actual credit dates. For historical receipt selection, use the separate date-window worksheet.
Sources and scope
Investor.gov's calculator separates estimated rate and compounding frequency from contributed funds. Our two ordering equations and numeric fixtures are independent model work; the official tool is not cited as endorsing these inputs. Freshly read DRIPCalc, Snowball and Wisesheets calculator pages already describe reinvestment and periodic inputs. The additional material here is this exact cash-ordering counterexample and test file, within that read sample rather than a claim about the entire web.