The Schwab US Dividend Equity (SCHD) ETF stock has held steady this month even as the blue-chip indices like the Nasdaq 100 and S&P 500 crashed. The SCHD ETF stock was trading at $28.45 on Monday, up by about 6% from the lowest level this year.
Market volatility and uncertainty make defensive ETFs like Schwab U.S. Dividend Equity ETF attractive for stability and resilience. SCHD's low expense ratio and large-cap value stock composition make it cost-effective and less volatile compared to tech-heavy ETFs like SPY and QQQ. SCHD outperforms during market downturns, offering a 3.6% dividend yield and better downside protection, making it ideal for tactical allocation during uncertain times.
With volatility spiking and stock market indexes like the S&P 500 (^GSPC 0.55%) and Nasdaq Composite (^IXIC 0.70%) down on the year, investors may be looking for ways to diversify their portfolios and collect some passive income.
Popularity doesn't equate to suitability. Investors must learn to define their requirements and goals from their investments. A well-designed income strategy with active management can support financial security in retirement.
SCHD is a "Strong buy" in the current fragile environment due to its perfect balance of dividend yield and growth. Growth stocks face headwinds from peak optimism, geopolitical risks, and inflation, making SCHD a safer investment. SCHD's main rivals, VIG and VYM, have less defensive sector exposure and weaker dividend scorecards.
My goal is to use dividend income to supplement or fully support my cost of living, a common aspiration among investors. SCHD's stock selection process ensures a combination of a solid starting yield and strong dividend growth (13.03% CAGR since 2018). Historical data suggests dividend growth stocks, including SCHD's underlying index, tend to outperform over longer periods—especially in bear markets.
Schwab U.S. Dividend Equity ETF (SCHD 0.67%) has a unique approach to stock selection, and in some ways, it feels like it is more than just a simple index fund. That, however, is not the case, since it basically tracks the Dow Jones U.S. Dividend 100 Index.
SCHD's excess CAPE yield relative to SPY is at the highest level in at least a decade. This is a strong – and more reliable - signal in my view that SCHD's yield is too cheaply valued when benchmarked against the overall equity market. It also prompts me to upgrade SCHD to a strong buy rating.
Building A $100,000 Dividend Portfolio: Enhancing SCHD's Income With High-Yield Stocks
If you're building out your first portfolio, having most of that in a low-cost exchange-traded fund (ETF) is a good idea.
SCHD hasn't climbed back to its highs although the S&P 500 recovered to re-test recent highs last week. Is something amiss? Rising long-term yields and competitive fixed income yields could have played a role here, affecting buying sentiment. Still SCHD's relatively low P/E and sound construction methodology suggest the companies under the hood remain high quality.
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