SCHD vs O: Dividend / Income Calculator Comparison

Which tends to suit whom. If you want the largest cash flow you can draw this year — often at or near retirement — O's monthly REIT distribution pays noticeably more per dollar today, and it tends to sit more comfortably inside an IRA or Roth where its ordinary-income tax is deferred or removed. If you have a longer horizon and want a tax-favored dividend that compounds and lifts your yield-on-cost, SCHD keeps more of its return in a rising per-share payout and an un-capped share price. To be explicit about the model's tilt: the growth anchors here (SCHD ~7% vs O ~2.8% per-share) favor SCHD on long-horizon value and yield-on-cost, while O holds the current-income lead for most horizons — so which column you are choosing on decides, and the table can shift when you change the horizon, contributions, or account.

Yield today versus a dividend that grows

O starts from a higher distribution — roughly 5.1% as of 2026-06 against SCHD's ~3.3% — so on day one it pays about half again as much income on the same dollar, and it pays it monthly rather than quarterly. But the two streams behave differently over time. SCHD's per-share dividend has grown near 7% a year over the last three years (+5.4% in 2025), and the model compounds a tapered ~7% anchor forward. O is a net-lease REIT whose payout rises with contractual rent escalators and acquisitions: dependable and long-tenured, but modeled at a slower ~2.8% per-share growth. The calculator runs both forward under your single scenario and reports the crossover year — the point where SCHD's faster-growing stream can overtake O's higher but slower-growing distribution. Whether it crosses inside your horizon depends on the growth rates you assume, which are editorial preset assumptions, not predictions.

The tax character is different, and it matters

Two funds with the same headline yield can leave very different amounts after tax. SCHD's distributions are generally qualified dividends, taxed at the 0/15/20% long-term capital-gains rate in a taxable account. O's distributions are REIT ordinary income: most of the payout is taxed at your marginal rate, though the ordinary-income slice is generally eligible for the §199A qualified-business-income deduction, and roughly 15% is modeled as return of capital, which is not taxed in the year received but lowers your cost basis and is recaptured when you sell. The Account toggle above makes the gap explicit: in a taxable account each year's distribution is taxed before the DRIP reinvests, and the after-tax column reflects the tax paid plus any tax due if you sell at the horizon; inside a Traditional IRA or Roth both funds compound untaxed. A REIT's ordinary-income character is generally where a tax-advantaged account earns its keep, which is why the same O projection can look meaningfully different by account.

Return of capital and a rate-sensitive price

A slice of O's distribution is typically classified as return of capital on the year-end 1099 — that is a tax label, not a measure of what the REIT earned: it defers tax by lowering your cost basis, and the model applies it in the tax layer only, not as a NAV drag (rents, not option premiums, fund the payout, so neither fund triggers the covered-call total-return cap). The real modeling difference is rate sensitivity: O's price is more sensitive to interest rates than a broad stock fund, so its price growth is modeled slower, at 2% before costs, with a wider range to reflect that uncertainty. This is the single reason comparing the two on yield alone is misleading — it reads O's larger check as pure surplus while giving SCHD no credit for the faster dividend growth and price compounding underneath its smaller one.

Total return, and reading the table honestly

Put the pieces together and the comparison is a trade, not a ranking. O converts more of its return into monthly cash you can spend now, at the cost of slower per-share growth, heavier ordinary-income tax, rate sensitivity, and a return-of-capital component. SCHD gives up current income for a dividend that grows faster, is taxed more lightly, and rides an un-capped price. The columns that actually decide the outcome are total value and after-tax if sold — not the headline yield the two funds lead with. Over short horizons or inside a tax-advantaged account, O's larger distribution can keep it ahead the whole way; over long horizons in a taxable account, SCHD's faster growth and lighter tax often close and cross the gap. Change the horizon, contributions and account above and watch which one leads — that sensitivity is the honest answer, and it is why each fund keeps its own calculator with full assumptions and sources.