What changes if one modeled dividend is smaller?
A chosen 25% reduction in the second modeled dividend lowers the two-step total from $10,604.50 to $10,528.375: a $76.125 difference. This example starts with $10,000, a 3% modeled annual rate and half of every dividend reinvested. These are test inputs. It does not say SCHD has cut, or will cut, its distribution.
The partial-reinvestment worksheet keeps the rate unchanged. Here we multiply a selected step's gross payment by a separate factor. A one-step shock and a persistent reduction are different scenarios; neither is a prediction. Price changes, taxes, fees, extra deposits and interest on retained cash are all excluded.
Keep the cut separate from the allocation
Convert the chosen cut to a remaining-payment factor: 1 − 25 ÷ 100 = 0.75. The reinvestment fraction stays 50 ÷ 100 = 0.5. The annual model rate stays 3 ÷ 100 = 0.03. Applying a 0.75 payment factor is not the same instruction as changing the reinvestment fraction to 0.75.
Step one is unchanged: $10,000 × 0.03 = $300. Reinvest $150 and retain $150, leaving $10,150 invested. Step two would normally generate $10,150 × 0.03 = $304.50. The selected reduction makes that payment $304.50 × 0.75 = $228.375. Half, $114.1875, goes into assets and the other half into cash.
Assets therefore close step two at $10,264.1875 and cash at $264.1875. Together they are $10,528.375. The missing gross amount is $304.50 − $228.375 = $76.125, split evenly between less reinvestment and less retained cash. That equals the difference from the unchanged $10,604.50 total. This identity checks that the reduced payment has not been subtracted twice.
A restored rate does not restore the missing capital
In the one-step path, the third multiplier returns to one. The next gross payment is then $10,264.1875 × 0.03 = $307.925625. That is below the unchanged path's $309.0675, because the shock left fewer modeled assets generating the next payment. A return of the multiplier to one does not automatically make up cash that was never received.
After three steps, the unchanged path totals $10,913.5675, while the one-step-shock path totals $10,836.300625. The difference is $77.266875: the original $76.125 shortfall plus $1.141875 of missing third-step income. The extra shortfall is $38.0625 of missed reinvestment multiplied by 0.03.
For a persistent scenario, keep the third multiplier at 0.75. Its third gross payment is $230.94421875, and the ending assets-plus-cash total is $10,759.31921875. That scenario reduces payments in two steps; it must not be labeled a one-time cut. The unchanged, temporary and persistent branches share the same opening inputs, so the multiplier sequence is the only changed assumption.
| Scenario | Step | Multiplier | Payment | Assets | Cash | Total |
|---|---|---|---|---|---|---|
| unchanged | 1 | 1 | 300.00 | 10150.000 | 150.000 | 10300.000 |
| unchanged | 2 | 1 | 304.50000 | 10302.250000 | 302.250000 | 10604.500000 |
| unchanged | 3 | 1 | 309.06750000 | 10456.783750000 | 456.783750000 | 10913.567500000 |
| one_step | 1 | 1 | 300.00 | 10150.000 | 150.000 | 10300.000 |
| one_step | 2 | 0.75 | 228.3750000 | 10264.18750000 | 264.18750000 | 10528.37500000 |
| one_step | 3 | 1 | 307.9256250000 | 10418.15031250000 | 418.15031250000 | 10836.30062500000 |
| persistent | 1 | 1 | 300.00 | 10150.000 | 150.000 | 10300.000 |
| persistent | 2 | 0.75 | 228.3750000 | 10264.18750000 | 264.18750000 | 10528.37500000 |
| persistent | 3 | 0.75 | 230.944218750000 | 10379.6596093750000 | 379.6596093750000 | 10759.3192187500000 |
Download all three paths and exact intermediate values · Download zero and missing-input tests
Reproduce the scenario
For each step, gross dividend = opening assets × modeled rate × that step's multiplier. Reinvested amount = gross dividend × allocation fraction. Cash taken = gross dividend − reinvested amount. Next assets = opening assets + reinvested amount; cumulative cash adds cash taken. Compare ending assets plus cumulative cash once.
Our decimal event loop is independently checked against a rational-number replay after every step. The replay keeps the multiplier sequence in the input file and preserves full decimals. Displayed cents would show the step-two total as $10,528.38, but that rounded display cannot replace $10,528.375 when checking the exact $76.125 difference.
At zero yield or zero opening assets, the payment multiplier has no dollars to reduce. A multiplier of one reproduces the unchanged branch. A zero multiplier makes only that selected payment zero; later payments still depend on the remaining assets and their own multipliers. Zero elapsed steps leave the original $10,000 with no cash receipts.
A missing multiplier has no numeric output in the test file. Negative factors and factors above one are rejected by this cut-only worksheet. A value above one could represent a different growth scenario, but silently accepting it here would change the question. A missing factor is never relabeled a confirmed zero payout.
What this scenario cannot tell you
It cannot estimate the probability or size of an actual dividend cut, identify an announced payment, or recommend a holding. It assumes a constant price path, so it omits capital losses or gains accompanying a real distribution change. An actual fund analysis would need dated issuer records and price observations; the selected factor here has no such evidentiary role.
Sources and audit boundary
Investor.gov separates estimated-rate assumptions from contributed money. We extend our own fixed-allocation model with an independently chosen payment-factor sequence. Today’s three read comparator pages already discuss growth and reinvestment; our addition is this three-branch shock reconciliation and its downloadable tests. This is a bounded editorial audit, not a claim of web-wide originality or an observed change in SCHD.