The Best High-Yield Dividend ETF to Invest $1,000 In Right Now

Core Viewpoint - Schwab U.S. Dividend Equity ETF (SCHD) is recommended as a suitable high-yield ETF for dividend investors, emphasizing its investment strategy that mirrors individual stock selection [1][10]. Group 1: ETF Overview - Schwab U.S. Dividend Equity ETF is an index-tracking ETF that follows the Dow Jones U.S. Dividend 100 Index, requiring investors to understand the index's performance to gauge the ETF's value [2]. - The ETF comprises 100 stocks selected based on a rigorous screening process, focusing on companies that have increased dividends annually for at least a decade, excluding real estate investment trusts [4]. - A composite score is calculated for potential stocks based on cash flow to total debt, return on equity, dividend yield, and five-year dividend growth rate, aiming to identify financially strong and well-managed companies [5]. Group 2: Performance and Characteristics - The ETF employs a market cap weighting, meaning larger companies have a more significant impact on performance, and it has a low expense ratio of 0.06% [6]. - The ETF offers a balanced approach, providing an attractive yield of approximately 3.8%, reasonable capital growth, and consistent dividend growth over time [8][10]. - The portfolio is currently underweight in technology (8%) and more concentrated in energy (19%), consumer staples (18%), and healthcare (16%), which may present a diversification advantage compared to other ETFs heavily weighted in technology [11][14]. Group 3: Investment Strategy - Investors are advised to focus on understanding the ETF's index construction rather than chasing performance, as a strong index can indicate a worthwhile investment [13]. - A $1,000 investment in SCHD allows for the purchase of roughly 36 shares, providing diversification that may be lacking in other ETFs, particularly those tracking the S&P 500, where technology constitutes a significant portion [14].