Growing dividend dollars can buy less than their nominal growth suggests.
Assume a $100 baseline annual income, 3% nominal income growth and 2% inflation. The next $103 has purchasing power of 103/1.02 = about $100.98 in baseline-year dollars. The exact modeled real growth is (1.03/1.02 − 1) × 100 = about 0.980392%, not 3% and not exactly 1%. Both rates are chosen assumptions, not observed SCHD growth or current inflation.
This worksheet isolates the buying power of an income stream. It does not model portfolio returns, share-price changes, new contributions, reinvestment, taxes or fees. The growth-input audit explains a different issue: what the existing calculator's growth controls change. We do not modify those controls here.
Track nominal income and a price index separately
The Investor.gov purchasing-power definition connects what money can buy with inflation. Our example turns that distinction into a declared index: baseline year 0 has price index 1. Each later modeled year multiplies the index by 1 + the assumed inflation rate.
Let B = 100, g = 3/100 and i = 2/100 be the explicitly selected inputs. At modeled year t, nominal annual income is N(t) = B × (1 + g)^t, the price index is I(t) = (1 + i)^t, and income in baseline-year dollars is R(t) = N(t)/I(t). The baseline row is a reference level, not an additional future dividend payment.
Year 1 has nominal income $103 and price index 1.02. Its exact real amount is 5150/51 baseline dollars. Year 2 has nominal income $106.09 and index 1.0404. Its exact real amount is 265225/2601 baseline dollars, about $101.97. Dividing every future row by the same one-year index would misstate the second year's purchasing power.
| Year | Nominal USD | Exact price index | Exact baseline-year dollars |
|---|---|---|---|
| 0 | 100 | 1 | 100 |
| 1 | 103 | 51/50 | 5150/51 |
| 2 | 106.09 | 2601/2500 | 265225/2601 |
Download every scenario's year-index ledger · Download zero, missing and invalid-input results
Why subtracting the two percentages is only an approximation
The exact one-step growth factor is (1 + g)/(1 + i). With the chosen g = 0.03 and i = 0.02, subtracting 1 gives 1/102; multiplying by 100 expresses it as 50/51%, approximately 0.980392%. The shortcut (g − i) × 100 gives 1%, but that ignores the price-index denominator.
The two-year real gain from the $100 baseline is ((1.03/1.02)^2 − 1) × 100 = about 1.970396%. It is not obtained by adding the two annual dollar amounts or by multiplying the rounded first-year percentage by two. The ledger preserves exact fractions until the display step, so rounding does not create a new growth assumption.
Equal growth and inflation leave this real income flat
Set both chosen rates to 3%, while keeping B = $100. Year 1 nominal income is $103 and its price index is 1.03, leaving exactly $100 in baseline-year dollars. Year 2 nominal income is $106.09 and its index is 1.0609, again leaving $100. Matching rates cancels in this constant-rate model; it is not a promise that actual distributions will track consumer prices.
Set nominal growth to zero and inflation to the chosen 2%. The next nominal $100 converts to 100/1.02 = 5000/51, about $98.04 in baseline dollars. Set inflation to zero instead and real amounts equal nominal amounts. These branches distinguish unchanged cash from unchanged buying power.
Zero, missing and invalid inputs
An explicitly zero baseline produces zero nominal and real dollars throughout. Its percentage change relative to that zero baseline is undefined, so the result file leaves that percentage blank. A zero-year horizon returns the baseline row only; it does not invent a future payment. Missing baseline, growth or inflation inputs return unknown rather than selecting a default rate.
Inflation at −100% would make the next price index zero, so that input is invalid; values below it are invalid too. Nominal income growth below −100% would create negative income in this nonnegative-income schema and is rejected. Exactly −100% nominal growth is allowed as a hypothetical complete income loss, producing zero future income. A fractional or negative year count is rejected.
A separate chosen −2% inflation case, with zero nominal growth, raises the next $100's baseline purchasing power to 100/0.98 = 5000/49, about $102.04. That is a deflation sensitivity, not a prediction. Each valid row is checked with exact fractions and an independent Decimal calculation; missing values never become zero.
Does SCHD actually keep up with inflation?
This fixture cannot establish that. A public reader asks whether SCHD keeps up with inflation when dividends are taken as cash. Answering historically would require dated income, an explicit inflation series and base period, share holdings and a stated treatment of taxes. Answering about the future cannot be established by choosing a favorable growth input.
Changing the price-index assumption does not change the cash paid in our model. It changes the unit used to compare that cash across years. Nor is this a complete total-return calculation: capital value and cash distributions are different outputs. Keep them separate when interpreting a dividend calculator.
Evidence and limits
Sources read October 29, 2026. Investor.gov supplies the purchasing-power concept; the reader question supplies context, not numerical facts. All income, growth and inflation values above are explicitly chosen. The site's existing annual model and the three fixed comparator bodies were read to check scope. This independent index ledger and its boundary outputs are additions within that bounded read, not a claim of whole-web originality or future performance.
From a constant-rate model to dated historical inputs
The rates above are hypothetical. The 2025 payable-month CPI ledger instead joins issuer distribution dates with published monthly indices and an explicitly assumed holding. Keep the two methods separate.
