Why I Can't Stop Buying This Popular ETF Even Though It's Up More Than 10% Already in 2026.

Core Viewpoint - The Schwab U.S. Dividend Equity ETF (SCHD) is a popular choice among income-focused investors due to its attractive dividend yield, strong historical returns, and low costs, making it a favored investment option despite a price surge of over 10% this year [1][2]. Investment Performance - The ETF has significantly outperformed the S&P 500 this year, with a trailing 12-month dividend yield of 3.3%, nearly triple that of the S&P 500's 1.2% [2]. - The ETF's holdings trade at about 20 times earnings and 10.7 times cash flow, which are lower valuations compared to the S&P 500's 22.3 times earnings and 14.5 times cash flow, indicating a more attractive investment opportunity [3]. Investment Strategy - The ETF tracks the Dow Jones U.S. Dividend 100 Index, focusing on 100 high-yield dividend stocks, and screens companies based on dividend quality characteristics such as yield, five-year dividend growth rate, and financial strength [4]. - Historical data shows that dividend growers and initiators have delivered the highest annual returns at 10.2%, compared to other dividend policies [4]. Dividend Growth - The current holdings of the ETF have grown their dividends at a rate of over 8% annually over the last five years, surpassing the S&P 500's 5% annualized growth rate during the same period, resulting in a higher current yield and income growth rate for the fund [6].