Why the Schwab U.S. Dividend Equity ETF (SCHD) Could Deserve a Spot in Your Portfolio

Core Insights - The Schwab U.S. Dividend Equity ETF focuses on high-performing dividend-paying stocks, which have historically outperformed non-payers by more than 2-to-1 over the past 50 years [1][2]. Fund Overview - The ETF is passively managed and tracks the Dow Jones U.S. Dividend 100 Index, selecting U.S. companies with at least 10 years of dividend payments and ranking them based on financial metrics [4]. - The fund's last update revealed an average dividend yield of 3.8%, significantly higher than the S&P 500's 1.2% [5]. Performance Metrics - Over the past five years, the companies in the fund have increased their payouts by an average of 8.4% annually, surpassing the S&P 500's 5% growth [5]. - The ETF has produced an average annual return of 11.5% since inception, including reinvested dividends, indicating robust performance [10]. Investment Strategy - The fund emphasizes dividend growth, which has historically provided the best returns, with dividend growers and initiators yielding 10.2% compared to non-payers and dividend cutters [10]. - The ETF's top holding is PepsiCo, which has raised its dividend for 53 consecutive years, showcasing the fund's focus on consistent dividend payers [6][7]. Conclusion - The Schwab U.S. Dividend Equity ETF is positioned as an ideal foundational holding for investors seeking stability and long-term growth through steady, growing payouts [11].