The Schwab US Dividend Equity ETF (SCHD) has done well this year and is hovering near its all-time high of $29.33. It has risen by 16.2% in 2024, underperforming the S&P 500 index, which has risen by over 25% this year.
ETFs can add stability and build wealth
Diversification is crucial for long-term wealth, and ETFs offer an easy way to achieve it, especially dividend-focused ETFs like SCHD, VIG, and VYM. SCHD is a versatile ETF with strong dividend growth, a 3.4% yield, and broad sector exposure, making it a great portfolio complement. VIG targets companies with consistent dividend growth, boasting a 1.7% yield and a 10% five-year dividend growth rate, heavily weighted in technology.
This fund could be the perfect investment for those wanting financial freedom through endlessly growing dividends.
This article downgrades SCHD to HOLD and reiterates my BUY rating on SCHH due to changes in interest rates and future rate outlook. Due to recent rate cuts, the REIT sector is one of the most attractively valued sectors on our Market Sector Dashboard. SCHD is a solid candidate in this expensive market, with high-quality holdings and reasonable valuation.
If you are looking to get into dividend stocks, one of the best choices right now is the Schwab US Dividend Equity ETF.
Investors looking to add exposure to top exchange traded funds (ETFs) in the market certainly have plenty of options to choose from.
SCHD has one flaw. It has no exposure to real estate. SCHH can fill this void, but it also some issues.
Current market conditions, including a high average P/E ratio and weak performance of major tech stocks, suggest a potential correction in growth stocks. The Schwab U.S. Dividend Equity ETF offers a compelling investment opportunity due to its low exposure to the Technology sector and a higher dividend yield compared to its peers. Beyond its dividend yield, SCHD has demonstrated significant stock price appreciation over the past decade, providing a balanced investment option.
One of the main drawbacks of high durable income investing is the opportunity cost that comes from reduced income growth potential. However, as I have shown in this article, by being very selective, it is possible to achieve ~ 7% portfolio yield with also ~ 7% income growth rate going forward. Granted, the growth is not in double digit territory as for SCHD and it might not come true, but that could be just as easily the case for SCHD as well.
We're all hopefully going to age into retirement. And as we continue to invest on our money toward our golden years, many investors may wonder – what's the best path toward the kind of wealth building journey that will make these years the most memorable and enjoyable?
As valuations and the overall market get increasingly frothy, this contrarian dividend strategy is increasingly attractive. We share five reasons why the Schwab US Dividend Equity ETF (SCHD) is particularly compelling right now, plus one critical risk factor every investor needs to consider. We conclude with our strong opinion on who should invest.