Schwab U.S. Dividend Equity ETF™ has lagged the broader market rally and investors want anshwers. An explanation of the muted rally is offered. SCHD remains a conservative, diversified choice for stable, reliable, and growing dividends, but shouldn't be your only ETF, especially for younger or growth-focused investors.
Under current Trump administration policies, VDY ETF offers a compelling total return opportunity due to strength in the Canadian dollar combined with U.S. dollar weakness. VDY's top holdings are concentrated in the Canadian Financials & Energy sectors, with Royal Bank of Canada, Enbridge, and Canadian Natural Resources in the portfolio. Canadian dividend yields are now more valuable for U.S. investors, contributing to VDY's ~14%+ out-performance versus SCHD over the past year.
You don't have to pick individual stocks to grow your money.
The Schwab U.S. Dividend Equity ETF is a high-quality, cost-efficient dividend-focused ETF with a low expense ratio of 0.06% and a strong track record of dividend growth. Ideal for investors seeking consistent, reliable, and growing income, especially those nearing or at retirement age due to its superior dividend growth. SCHD's strategy focuses on high dividend-yielding stocks with strong financials, excluding rapid growth tech companies, making it a stable but lower total return option.
The Schwab U.S. Dividend Equity ETF has high allocations to the Consumer Staples, Energy, and Health Care Sectors but lacks diversification in Materials, Utilities, and Real Estate Sectors. To enhance diversification, I added Cohen & Steers Quality Income Realty Fund and JPMorgan Nasdaq Equity Premium Income ETF, focusing on the Real Estate and Technology Sectors respectively. The portfolio's Weighted Average Dividend Yield [TTM] is 6.09%, with a 5-Year Weighted Average Dividend Growth Rate of 6.72%, projecting significant future income for investors.
SCHD has become a popular ETF because its energy and consumer staple dividend stocks are seen as relatively safe, amid the current market uncertainty. Unfortunately, the perception here is largely incorrect. SCHD's energy stocks import oil from Canada, and consumer staples in general are heavily involved in importing and exporting. Foreign stocks and financials are more interesting right now than U.S. consumer staples.
My 4-Factor Dividend Growth Strategy, launched in November 2022, customizes SCHD's stock selection for a more growth-oriented investment style. Despite a -4.12% decline in April, the portfolio's long-term CAGR remains strong at 14.42%, outperforming SCHD but trailing the S&P 500. The portfolio's forward dividend yield increased to 2.30%, with April 2025 dividend income 136.88% higher than April 2024.
I previously rated Schwab U.S. Dividend Equity ETF™ as a strong buy due to its resilience during downturns, but recent reconstitution and tariff changes have prompted a downgrade to buy. SCHD's 2025 reconstitution increased exposure to energy and consumer staples. These sectors are most likely to be negatively impacted by the new tariffs in the near term, say the next 1 year or so.
Dividend ETF SCHD has seen a surge in interest post-Liberation Day, with $1.19B in net inflows, nearly double that of VIG. Key attractions include a low expense ratio, diversified holdings, and a strategy focused on consistent dividend payers.
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Investing in the stock market can seem like a daunting task. There are so many options available.
Income investing versus growth investing is a hotly debated topic. Neither is necessarily better outright, and it's about considering how your investing strategy fits in with your lifestyle. A dual-prong income approach can help you live with an income safety net while growing your income over the long term. Schwab U.S. Dividend Equity ETF is one of the best core holdings for this strategy due to its persistent dividend growth and share price appreciation.