Secure Enduring Wealth? Invest in This Index Fund Permanently.
The Schwab U.S. Dividend Equity ETF (SCHD) is a popular choice for investors seeking dividend income, growth, and the potential for capital appreciation. The ETF, which trades like a stock, is primarily composed of high-dividend-yielding U.S. equities.
The top 10 holdings of SCHD, which together make up around 40% of the ETF's value, are Texas Instruments, Chevron, PepsiCo, Cisco Systems, ConocoPhillips, Amgen, Merck, Altria Group, AbbVie, and Verizon Communications.
Chevron Corporation (CVX) and Altria Group, Inc. (MO) hold approximately 4.36% and 4.32% of the ETF, respectively. PepsiCo, Inc. (PEP) and Cisco Systems, Inc. (CSCO) have weights of about 4.29% each, while ConocoPhillips (COP), the remaining top 10 holdings, and others not fully detailed, account for the remainder, totaling around 41.3%-41.5% of the ETF.
The overall dividend yield of SCHD is approximately 3.7% to 3.8%, with quarterly payouts, and a payout ratio around 55% as of the latest data. Individual holdings' yields vary, but SCHD has historically maintained an average yield of around 3% or more.
The ETF holds 103 stocks primarily from large U.S. companies, chosen for their quality dividends based on the Dow Jones U.S. Dividend 100 Index criteria.
Over the past 3, 5, and 10 years, SCHD has shown steady growth, with average annual gains of 8.14%, 12.54%, and 11.39%, respectively. These figures compare to the Vanguard S&P 500 ETF's average annual gains of 18.49%, 15.69%, and 13.51% respectively. It's important to note that an equal-weighted S&P 500 index has an average annual total return of 7.65%.
Investors should consider that while an S&P 500 index fund may offer faster growth on average, it will not produce nearly as much income as the Schwab U.S. Dividend Equity ETF. The expense ratio (annual fee) of SCHD is a competitive 0.06%.
The Dow Jones U.S. Dividend 100 Index, the index that SCHD tracks, measures the performance of high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends. This index selects stocks for fundamental strength relative to their peers, based on financial ratios.
On average, dividend-paying stocks have a higher annual total return compared to dividend non-payers, shrinkers, and eliminators. Dividend growers and initiators have an average annual total return of 10.24%, while dividend payers have a return of 9.20%.
Investors interested in the complete list of all 10 holdings can find this information directly on Schwab’s official ETF holdings page or from updated ETF data providers.
Investing in the Schwab U.S. Dividend Equity ETF (SCHD) could be a viable option for individuals focusing on personal-finance, especially those seeking dividend income, growth, and potential capital appreciation. The ETF's finance-related holdings, such as Chevron Corporation (CVX), PepsiCo, Inc. (PEP), and Cisco Systems, Inc. (CSCO), contribute significantly to its value. The overall dividend yield of SCHD is approximately 3.7% to 3.8%, making it a more income-oriented investment compared to some other index funds, like the Vanguard S&P 500 ETF.
