Core Insights - Not all investors prioritize high-growth stocks; many seek investments that provide reliable passive income [1] - As investors age, the appeal of steady income sources increases, allowing for reinvestment of dividends to build wealth over time [2] - High-yield dividend ETFs may be preferable to individual high-yield stocks to avoid potential value traps [3] Investment Options - The Schwab U.S. Dividend Equity ETF (SCHD) offers a yield of 3.9% and has a low expense ratio of 0.06%, making it attractive for income-focused investors [5] - This ETF tracks the Dow Jones U.S. Dividend 100 Index, which employs strict criteria to avoid unsustainable high-yield stocks, focusing on metrics like free cash flow to total debt ratio and return on equity [6] - The index is reconstituted annually, ensuring that only companies meeting its standards remain, with 20 new stocks added and 17 removed last year, including Pfizer due to increased debt from an acquisition [7] - The Schwab U.S. Dividend Equity ETF has delivered a 12.2% average annual return since its inception in October 2011 [7] Market Context - High-yield ETFs can provide a reliable income stream for retirees, with the Schwab U.S. Dividend Equity ETF helping to mitigate the risk of value traps [8] - The Alerian MLP ETF also offers a high yield, with MLPs currently at low valuations and showing strong growth potential and improved balance sheets [8]

Core Viewpoint - The S&P 500 is near all-time highs, but this should not deter long-term investment strategies. Building wealth takes time, and starting now is crucial. The Schwab US Dividend Equity ETF (SCHD) is presented as a viable investment option [1]. Group 1: Schwab US Dividend Equity ETF Overview - The Schwab US Dividend Equity ETF is an exchange-traded fund that tracks the Dow Jones U.S. Dividend 100 Index, focusing on companies with a strong history of dividend increases [2]. - The index selects companies that have at least 10 consecutive years of annual dividend increases, excluding real estate investment trusts to focus on well-managed firms [3]. - A composite score for each company is created based on factors like cash flow to total debt, return on equity, dividend yield, and five-year dividend growth rate, aiming to identify financially strong companies with growing dividends [4]. Group 2: Index Composition and Management - The index includes the 100 highest-ranked companies based on market capitalization, ensuring that larger companies have a more significant impact on performance. The portfolio is updated annually to reflect the best stocks according to the index's criteria [5]. - The ETF offers a low expense ratio of 0.06%, making it an attractive option for investors seeking dividend income [5]. Group 3: Investment Strategy and Timing - Wealth accumulation is emphasized as a long-term endeavor requiring patience. Despite the current market conditions, the dividend-focused ETF has been underperforming, suggesting that now is an opportune time to invest [6]. - The Schwab US Dividend Equity ETF simplifies the investment process for dividend investors by providing a diversified portfolio of dividend stocks in a single purchase [7].

Core Viewpoint - Schwab U.S. Dividend Equity ETF offers an attractive yield of 3.6%, significantly higher than the average yield of 1.2% for S&P 500 stocks, making it a compelling option for long-term dividend investors [2][9] 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, which was specifically created for this ETF [3] - The index excludes stocks with fewer than 10 consecutive annual dividend increases and real estate investment trusts (REITs), focusing on financially strong companies [5] - Stocks are scored based on cash flow to total debt, return on equity, dividend yield, and five-year dividend growth rate, ensuring a selection of companies with growth potential and a history of dividend increases [6][8] Group 2: Investment Features - The ETF provides a balanced combination of yield and capital growth, making it suitable for investors seeking reliable income without the need for extensive stock selection [9][10] - With a modest expense ratio of 0.06%, the ETF is cost-effective for investors [8] - Schwab U.S. Dividend Equity ETF can serve as a foundational investment for dividend investors and can be paired with bond ETFs or other dividend-focused ETFs for a diversified portfolio [10][11] Group 3: Long-term Income Potential - The ETF's unique approach to selecting dividend stocks positions it to deliver a reliable income stream for investors over the long term, allowing for tailored investment strategies [11]