The Schwab U.S. Dividend Equity ETF (NYSE ARCA: SCHD | SCHD Price Prediction) is a exchange-traded fund that tracks the total return of the Dow Jones Dividend 100 Index. In short, the fund is a low cost (and tax efficient) way for investors to hold the most financially stable and growing dividend stocks in the U.S. without having to go out and purchase shares of each companies stock.
For passive income investors or those looking to add stable returns to a portfolio, SCHD is a great fund to buy with a low .06% expense ratio (meaning for every $1,000 invested, you pay a $0.60 annual fee) and a 3.64% dividend yield ( vs. the market average of 1.22%).
SCHD Dividend Yield History
The Schwab Dividend ETF (SCHD) launched in 2011 here is the dividend payouts and yields since the funds inception.
| Year | Total Dividend | Yield |
| 2024 | $2.19 (1 payment left) | 3.45% |
| 2023 | $2.66 | 3.43% |
| 2022 | $2.56 | 3.51% |
| 2021 | $2.25 | 3.46% |
| 2020 | $2.03 | 3.32% |
| 2019 | $1.76 | 2.99% |
| 2018 | $1.44 | 2.77% |
| 2017 | $1.35 | 2.79% |
| 2016 | $1.26 | 2.90% |
| 2015 | $1.15 | 2.72% |
| 2014 | $1.08 | 2.60% |
| 2013 | $.92 | 2.40% |
| 2012 | $.73 | 2.10% |
SCHD Holdings and Stock Criteria
The Dow Jones Dividend 100 Index has a criteria to when adding or removing stocks to the Fund.
- Dividend Yield: The main focus of the ETF is dividend income, so priority number 1 is finding above average dividend payers with track records of consistent dividend payouts.
- Dividend Growth: The best capital allocators are able to grow companies that will not only pay dividend, but increase the payouts each and every year. The best of the best are called Dividend Kings (or companies that have increased dividend payments for over 50 years) and SCHD is focused on keeping those companies in the fund.
- Financial Health: Dividend paying companies are evaluated on a number of metrics including return on assets, debt to equity ratios and earnings quality metrics to ensure companies don’t run into trouble and trim or cut the amount of dividends they pay out.
- Market Capitalization and Sector Diversification: The size of the firm matters for the Dow Jones Dividend 100 Index, with only medium to large cap stocks being allowed into the fund. Additionally, the fund keeps a well diversified basket of companies that encompass numerous industries and sectors.
- Liquidity: Companies in the fund must have floor on trading volume to ensure liquidity so the fund can enter or exit positions to mimic the Dow Jones Dividend 100 Index.
Top 10 Largest Positions in SCHD
| Symbol | Name | Percent of Assets (%) | Market Value |
|---|---|---|---|
| HD | Home Depot Inc | 4.30% | $2.6B |
| VZ | Verizon Communications Inc | 4.25% | $2.6B |
| CSCO | Cisco Systems Inc | 4.19% | $2.6B |
| BLK | BlackRock Inc | 4.19% | $2.6B |
| TXN | Texas Instrument Inc | 4.03% | $2.5B |
| PFE | Pfizer Inc | 4.02% | $2.5B |
| CVX | Chevron Corp | 4.02% | $2.5B |
| BMY | Bristol Myers Squibb | 4.00% | $2.4B |
| LMT | Lockheed Martin Corp | 3.98% | $2.4B |
| KO | Coca-Cola | 3.88% | $2.4B |
Is SCHD a Buy?
Since inception SCHD has a solid performing investing with 12.92% annualized returns but for me, owning a dividend paying assets that is yielding 40% less than current U.S federal funds rates is not particularly attractive.
However, for those reaching or in retirement or for risk adverse investors, SCHD is a solid dividend paying vehicle with extremely low fees and should be entertained.
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