I Sold My Largest Holding, SCHD, And Here Is What’s Replacing It

As an investor, you generally only have one goal in life, and that is to make as much money as possible as quickly as you can. To achieve this, you aim to invest your money in assets that are expected to yield strong returns with minimal downside risk.

In the case of one Redditor, they initially believed the way to financial success was to invest heavily in SCHD, a Schwab U.S. Dividend Equity ETF that has recently delivered dividends of around 26 cents as of September 29, 2025.

Saying Goodbye to SCHD

According to the Redditor’s post in r/dividends, this change happened at the end of September, but they have “had it” with SCHD (NYSEARCA:SCHD | SCHD Price Prediction), which was once this individual’s largest holding.

While we don’t know the age of this Redditor, this decision might not have been a bad one, especially considering that it isn’t really a growth ETF. There is no question that SCHD can be a strong fund and a solid dividend ETF, but with a yield that sits in the 3-4% range, you would need around $2 million invested to earn about $80,000 per year in dividends.

This means there is limited capital appreciation potential, which is likely why this individual realized that SCHD alone wasn’t going to get them to whatever financial goal they have for the future. Instead, they are investing in a solid mix of funds and ETFs with higher yields, as well as stronger growth options.

What To Invest In Instead

If I were able to sit down with this Redditor and ask them why they have made this change into a bunch of other options, I’d likely get the following reasons.

Understandably, I would advise anyone in this situation to consider that if SCHD doesn’t align with their long-term investment goals, then getting out is the right move. Going “all-in” on one investment isn’t the best move, especially with at least some volatile names in the portfolio and at a volatile time in the market.

At the onset, this Redditor is explaining they went in with $0 or Realty Income (NYSE:O), which is right now enjoying a dividend yield hovering around 5.41%. Add to this a year-to-date return of 17.91% as of October 3, 2025, and it’s easy to understand why the Redditor went in this direction.

The same can be said for MAIN (NYSE:MAIN) or Main Street Capital, which is currently riding a wave of a 15.24% YTD return. MAIN offered a 25-cent dividend for the remainder of the year, so you are getting the same income stream as SCHD with better underwriting. ExxonMobil (NYSE:XOM) is another area of opportunity for this Redditor, as it has a quarterly dividend of 99 cents right now, with a YTD return of 6.33%, so you are getting a growth upside as well as passive income. This is a win-win compared to SCHD for this Redditor.

If you are investing in RTX (NYSE:RTX) and Raytheon Technologies, you should know that you are getting a staple name in the technology and defense sectors. With a massive 46.10% YTD return, I’m sure this Redditor is kicking themselves for not going into RTX even earlier in the year. Add in a quarterly dividend of $0.68, and while you have the lower yield, you have less sector risk and plenty of contract-backed revenue sources to keep the money flowing for years to come.

Starbucks poses a greater risk for this Redditor, and I would caution against a deep investment here, as the company is in the midst of a turnaround. Yes, I would argue that it’s still the coffee giant and unlikely to yield that title, but I would still cautiously approach investing until you get a better sense of which way the wind is blowing.

Why This Mix Makes More Sense

With this updated portfolio, you have arguably the most important thing for this Redditor, and what I would recommend the most: more diversification across cash-flow types. There is a strong mix of property cash flow, staple cash cows, defense, and consumer growth.

Not only does this spread the risk far more broadly, but it also encompasses government contracts and consumer spending in a single dividend index, rather than concentrating them in just one ETF. Better yet, this new portfolio is maintaining a balance between growth and stability, with the lone outlier being Starbucks, and whether its turnaround will take a short or long amount of time to yield results.

The most important piece of advice I could offer to this Redditor is to keep monitoring their holdings and ensure that they have the right balance. While I’m guessing they will do so more regularly, looking at everyone from a 10,000-foot view at least once a quarter makes sense to understand better if you need to rebalance, as well as adding or subtracting a specific sector.