Dividend stocks have gotten clobbered recently. The main catalyst is the Federal Reserve's recent decision to slow the pace of future interest rate increases.
Dividend investing at a time when the S&P 500 index is yielding a scant 1.2% is not easy. It is even more difficult if you are using exchange-traded funds (ETF) as your investment vehicle of choice.
Recent price corrections have pushed SCHD's yield to very attractive levels. But the attractiveness is dampened by a few other factors. SCHD's dividend growth has slowed, with the latest payout showing only a 6.9% annual growth rate, a far cry from previous double-digit rates.
SCHD's yield has become attractive relative to solid high yield picks. Current yield of 3.6% with ~11% income growth is a powerful mix. In this article, I share 3 key reasons how income-oriented investors could benefit from going long SCHD.
According to the daily charts, this exchange-traded fund with a high dividend yield of 3.67% has been under pressure as it has fallen below its short-term moving averages in the oversold territory.
The Schwab US Dividend Equity ETF (SCHD) has crashed hard recently, falling below the 50-day moving average and the crucial trendline. It has dropped from the year-to-date high of $29.45 to $27.87, its lowest swing since November 5.
SCHD has a significant underweight in technology and overexposure to banks. A dovish rate outlook is beneficial for long-duration tech growth stocks, but is a headwind for banks due to higher deposit costs weighing down on NIMs. Industry commentary suggests the tech spending is expected to rebound in 2025. Due to omission of this exposure, SCHD is vulnerable to lag the S&P500.
Schwab U.S. Dividend Equity ETF offers consistent dividends, high diversification, and long-term growth, making it ideal for passive income investors. With receding inflation and a robust U.S. economy, equity-oriented ETFs like SCHD are compelling investment opportunities for 2025. The ETF's diversification across industries and strong dividend record provide stability and growth potential, even amid macroeconomic fluctuations.
The Schwab US Dividend Equity ETF (SCHD) is a well-established, stable fund with a strong history of consistent, rising dividends, ideal for conservative investors. The Pacer Metaurus US Large Cap Div Multiplier 400 ETF (QDPL) is a much newer fund that caps S&P 500 exposure at 90%, but pays out 4x its dividends. These ETFs compete to see which fund is better for investors and which could be considered a core position for a dividend-heavy portfolio. Which fund should equity dividend investors consider?
SCHD's share price and dividend growth soared in 2024, delivering a YTD price and total return of 13.57% and 16.71% respectively. My prediction for the 2024 Q4 dividend is $0.2544, representing an annual payout growth of 11.09%, driven by the fund's reconstitution in March 2024. Key additions like Bristol-Myers Squibb and Cincinnati Financial Corporation outperformed deletions like Merck and 3M, increasing SCHD's price and dividend growth.
The Schwab U.S. Dividend Equity ETF™ is a conservative, long-term investment offering stable dividend growth and capital appreciation, ideal for conservative investors. The SCHD ETF is diversified across 103 holdings, with top sectors including financials, healthcare, and consumer defensive, and top holdings like Cisco, Home Depot, and BlackRock. This ETF is not for rapid gains but provides slow, steady growth, making it a suitable candidate for long-term portfolios, especially during market dips.
When it comes to investing, the power of compounding dividends cannot be denied. Companies' ability to regularly increase their dividend requires growing free cash flow.