Want Decades of Passive Income? Buy This ETF and Hold It Forever

Core Viewpoint - The Schwab U.S. Dividend Equity ETF (SCHD) is presented as a strong option for generating passive income through dividends, with a focus on long-term holding for consistent returns. Group 1: ETF Overview - The Schwab U.S. Dividend Equity ETF aims to track the Dow Jones U.S. Dividend 100 Index and currently holds 103 stocks, including major companies like Texas Instruments, Chevron, and Cisco Systems [3] - The ETF has a strong track record, with its distribution increasing by 541% since its inception on October 20, 2011, equating to a compound annual growth rate of approximately 14% [4] Group 2: Performance Metrics - Over the past 12 months, the ETF has delivered a distribution yield of 3.87%, with a 30-day SEC yield of 3.85%, meaning a $100,000 investment could generate annual income of $3,850 [5] - The ETF has achieved an average annual return of 12.3% since inception and 12.9% over the last five years [8] Group 3: Risk and Valuation - The ETF is considered relatively low risk, focusing on high-yield dividend stocks with a history of consistent dividend payments and strong financials [6][7] - The average stock in the ETF trades at under 16 times trailing 12-month earnings, which is significantly lower than the S&P 500's price-to-earnings multiple of nearly 30 [7] Group 4: Cost and Liquidity - The ETF has a low annual expense ratio of 0.06%, reflecting its passive management approach [8] - The total net assets of the ETF exceed $70.2 billion, with an average daily trading volume of approximately 16 million shares, ensuring high liquidity [9] Group 5: Comparative Analysis - While other dividend ETFs may offer higher yields, such as the SPDR Portfolio S&P 500 High Dividend ETF at nearly 4.5% and the JPMorgan Nasdaq Premium Equity Income ETF at 11.3%, the Schwab U.S. Dividend Equity ETF is noted for its reliability and potential for distribution growth [10][11] - The ETF is positioned as one of the top dividend ETFs in the market, excelling in reliability, distribution growth potential, and overall returns [11]