Is it advisable to purchase the Schwab US Dividend Equity ETF at present?
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The Schwab US Dividend Equity ETF (SCHD) is a popular choice for investors seeking income through dividends and modest capital growth. This index tracker follows the Dow Jones U.S. Dividend 100 Index, a composite of high-quality dividend growth stocks.
SCHD currently offers a dividend yield around 3.75%, notably higher than the broader stock market average, making it attractive for income-focused investors like retirees. Beyond the yield, SCHD has a history of consistent dividend growth, which can help protect purchasing power against inflation over time.
Since 2012 through June 2025, SCHD has delivered a compound annual return of approximately 11.84%, indicating solid total return potential combining both dividends and capital appreciation. The ETF experienced a maximum drawdown of around -21.54%, which recovered within 8 months, suggesting moderate risk compared to more volatile sectors like technology.
Analysts classify SCHD as a Moderate Buy, reflecting confidence in its balance of income, growth, and relative safety. The ETF's portfolio is rebalanced every year to ensure ownership of the "best" stocks according to its screening system, which creates a composite score for each stock based on cash flow to total return, return on equity, dividend yield, and the company's five-year dividend growth rate.
If one is seeking material income and modest capital growth, the Schwab US Dividend Equity ETF is likely an attractive buy. However, investors should be aware of typical market risks such as drawdowns and sector exposures in large-cap U.S. equities.
The Schwab US Dividend Equity ETF is a set-it-and-forget-it type of investment, with an expense ratio of 0.06%. It's important to note that while SCHD may not have the same total return potential as an S&P 500 index fund, its focus on dividend growth and income makes it a unique offering in the investment landscape.
The attractiveness of the Schwab US Dividend Equity ETF lies in its methodology, which has produced an attractive combination of income and capital appreciation. If you're an investor looking for a balanced profile suitable for a steady income stream combined with the potential for modest long-term capital growth, SCHD could be a worthwhile consideration.
Data provided in this article is from YCharts. The dividend yield of the Schwab US Dividend Equity ETF is nearly 4%, which is higher than the S&P 500's 1.2% yield. The ETF is a pooled product, similar to mutual funds, and attempts to buy high-quality dividend growth stocks, with a bias toward stocks with higher yields. The 100 stocks with the highest composite scores are included in the Dow Jones U.S. Dividend 100 Index.
- For those focusing on personal-finance, the Schwab US Dividend Equity ETF could be an ideal investment, offering a balance between income and moderate capital growth.
- By investing in SCHD, one might be able to generate a stable income stream while also considering potential long-term capital growth.
- As part of your business strategy, the Schwab US Dividend Equity ETF might be a worthy addition to your portfolio, given its unique focus on dividend growth and finance.
