The Schwab U.S. Dividend Equity ETF (SCHD -0.63%) is a popular exchange-traded fund (ETF) among dividend investors. It holds 100 of the highest-quality dividend stocks and tracks an index ( Dow Jones U.S. Dividend 100 Index ) that screens companies based on the quality of their dividends.
SCHD is a solid instrument for prudent income-investors to diversify their current income streams. The core investment case of SCHD is related to an acceptable initial yield and around double digit dividend growth rate. Yet, in the current market environment SCHD has become an even more attractive dividend paying vehicle.
My dividend growth portfolio is outperforming the S&P 500 this year, yielding over 5%, despite a three-year period of underperformance from 2022-2024. The recent surge in gold prices is driven by fiscal and monetary policy excesses, inflation fears, and geopolitical risks, but I prefer dividend-paying investments. The new 25% auto tariffs will likely increase car prices and hurt US carmakers' exports, making auto parts stocks like GPC more attractive.
A massive geopolitical uncertainty combined with higher interest rates and data center oversupply risks looks like a perfect combo for high-quality dividend machines like SCHD. SCHD, managed by Charles Schwab, invests in defensive sectors, providing a balanced, high-yielding, and growth-oriented dividend portfolio. SCHD's best-in-class dividend yield and growth make it a STRONG BUY in the current volatile environment.
Dividend investing is a process. It's not about the first year's dividend income; it's about 10 years out and more, when you really start to see the compounding process at work.
The Schwab U.S. Dividend Equity ETF™ remains a buy for conservative investors seeking stable returns and growing dividends despite annual reconstitution changes. The 2025 reconstitution impacts the dividend. Significant portfolio changes included the removal of Pfizer and BlackRock and the addition of energy stocks like ConocoPhillips and Schlumberger.
Dividends significantly boost total returns, contributing 84% of the S&P 500's total return over the past 60 years. Broad market indices like the S&P 500 and Nasdaq 100 are overvalued, suggesting the potential for sub-par future returns. Dividend stocks, on the other hand, tend to outperform during economic uncertainties and have a strong track record, making them a valuable addition to any portfolio.
The Schwab U.S. Dividend Equity ETF (SCHD -0.94%) is one of the largest exchange-traded funds (ETFs) focused on dividend stocks. The fund has over $77.5 billion in assets under management (AUM), making it the second-biggest fund geared specifically toward dividend investing.
The stock market has been a wild roller coaster ride for the past five years, shifting from bull market to bear and back numerous times.
The yield curve has become inverted since my last analysis of VTI, prompting me to consider hedging strategies for my equity exposure. SCHD is an excellent hedge idea for several reasons. SCHD has historically demonstrated far better resilience during market downturns in terms of severity or underwater duration.
SCHD's Index reconstituted at the close of business Friday, resulting in 20 additions and 17 deletions. The Index deleted Pfizer and BlackRock, while the addition ConocoPhillips is SCHD's new top holding. Total Energy sector exposure is now above 20%, which raises some concerns regarding dividend growth and consistency. My backtest reveals the new portfolio is designed for high-inflation years like 2022. SCHD's Index yield dropped by 0.07%, and shareholders should earn about 3.81% at current prices. Importantly, SCHD retained its quality, value, and dividend growth advantages over other dividend ETFs.
Dividend investing is awesome. The ultimate goal is to build a portfolio of dividend stocks that pay you enough cash to cover your living expenses while diversifying so that the payouts come from many companies.