Schwab US Dividend Equity ETF has a well-above-market 3.8% dividend yield. The exchange-traded fund uses a fairly complex approach to select stocks.
Schwab U.S. Dividend Equity ETF is underperforming in 2025, returning just 0.9% despite a broader stock market rally. SCHD's sector concentration, especially heavy exposure to Consumer Staples and lack of Utilities, is a key factor behind its weak performance versus peers like VYM. While SCHD has outperformed bonds over the long term, its current sector mix could offer some downside protection if the economy weakens.
Schwab U.S. Dividend Equity ETF™ reported a modest 3.5% YoY dividend growth, lagging behind the REIT sector's performance. SCHD's lack of REIT exposure may limit its income growth potential under current market and interest conditions. SCHD's income growth could be pressured by trade disputes, energy pricing, etc.
Schwab U.S. Dividend Equity ETF™ offers a compelling alternative to tech-heavy indices, with a 3.9% dividend yield and defensive, value-oriented portfolio. SCHD's diversified holdings, lower volatility, and strong dividend growth provide stability and consistent income. Its top holdings, including PEP and ABBV, show upside potential and support SCHD's superior yield compared to SPY's 1.1%.
Schwab U.S. Dividend Equity has severely underperformed over the past year due to its outsized focus on high-yielding cyclical stocks rather than historically safer, defensive yield or growth choices. The ETF's portfolio is heavily weighted toward sectors that usually struggle during market downturns, making it less resilient in recessions. SCHD has not been stress-tested in a major recession since its 2011 inception, raising concerns about future performance.
The Schwab U.S. Dividend Equity ETF stands out for its attractive 3.9% yield and strong dividend growth, appealing to income-focused investors. Compared to peers like VYM and VIG, SCHD offers a superior yield, making it a preferred choice for those seeking both income and growth. Despite recent underperformance versus the S&P 500 and Nasdaq-100, SCHD remains competitive against other income-producing assets like BDCs, MLPs, and REITs.
Legions of yield-seeking investors count on exchange-traded funds (ETFs) to provide consistent passive income streams.
SCHD has significantly underperformed recently. However, I think this is a feature, not a bug. I detail why I am more bullish than ever on SCHD.
When it comes to popular income-oriented ETFs, it's tough to top the value proposition and passive-income generation potential of the Schwab U.S.
The market just passed another milestone that has a lot of people uneasy. The Warren Buffett indicator, which adds up the total market capitalization (market cap) of all publicly traded U.S. companies and divides it by the country's gross domestic product (GDP), has pushed well past 200%, a level Buffett has in the past called "playing with fire.
SCHD has missed the ongoing AI mania, albeit with it triggering the expanded dividend yield of 3.76% compared to the 5Y mean of 3.27%. Thanks to the strategic portfolio reshuffling, the ETF has been able to deliver a quality and sustainable dividend story, as observed in the LTM payout growth of +6.1% sequentially. For example, SCHD's largest energy holding, COP, has hinted at nearly $8B in FY2025 free cash flow generation and over $15B by FY2029, despite the lower WTI spot prices.
The Schwab US Dividend Equity ETF (NYSEARCA:SCHD) is one of the largest and most commonly held in the US, but investors are starting to sour on the ETF in October.