What you are actually backtesting
SCHD tracks the Dow Jones U.S. Dividend 100 index. A company has to have paid a dividend for ten consecutive years just to be considered; the ones that qualify are then ranked on cash flow to total debt, return on equity, dividend yield and five-year dividend growth, and roughly the best hundred are held. It costs 0.06% a year.
Two things follow from that. First, this is not a high-yield fund in the naive sense — the screen deliberately passes over companies whose yield is high because the price collapsed. Second, it is concentrated: a hundred names, with sector weights that drift toward energy, consumer staples and healthcare as a by-product of the ranking rather than by design. That concentration is the risk you are taking in exchange for the quality filter.
Reinvested versus taken as cash
The two lines on the chart above are the same fund with one decision changed. The upper line buys more shares with every dividend at that day's close. The lower one leaves the cash idle, earning nothing — a deliberately unflattering floor, because real cash usually earns something, and the gap between the lines is the honest maximum that reinvestment was worth.
Over a decade that gap gets large, and not because the fund did anything different. Reinvested shares collect the next dividend, which buys more shares, which collect the one after. That is the entire mechanism, and it is why the reinvested income column climbs faster than the fund's own dividend growth rate.
What this backtest does not tell you
It is gross of tax. SCHD's distributions are largely qualified dividends, but in a taxable account you paid something on them every year, and reinvesting the after-tax remainder compounds more slowly than the line above. In a tax-advantaged account the chart is closer to what you got.
It is also one path. A ten-year window that starts at a different point produces a different answer, and a fund built on a quality screen tends to look best in the stretches where quality was rewarded. Move the start date and see how much the conclusion moves with it — that sensitivity is itself information.
Set it against another dividend fund rather than the S&P 500 by changing “Compare with” above, or open SCHD vs VYM.
Sources
Index methodology and expense ratio from Schwab Asset Management's SCHD documentation and S&P Dow Jones Indices' published rules for the Dow Jones U.S. Dividend 100. Prices and dividend history from Financial Modeling Prep's end-of-day feed.