Core Viewpoint - Stocks have historically outperformed other asset classes, but corrections are a normal part of the market cycle, with the Dow and Nasdaq currently in correction territory [2] Group 1: Market Performance - As of March 27, the Dow Jones Industrial Average and Nasdaq Composite have declined by 10.01% and 12.56% from their all-time highs, respectively, while the S&P 500 is down 8.74% [2] Group 2: Investment Strategies - ETFs are considered a smart choice during periods of increased market volatility, providing investors with safe-haven options [4] - The Schwab U.S. Dividend Equity ETF is highlighted as a particularly attractive investment during market downturns due to its focus on dividend-paying stocks [6][8] Group 3: Advantages of Schwab U.S. Dividend Equity ETF - Dividend stocks have historically outperformed non-dividend payers, with an annualized return of 9.2% for dividend stocks compared to 4.31% for non-payers over 51 years [9] - Dividend-paying stocks are less volatile, being 6% less volatile than the S&P 500, which helps mitigate the emotional impact of market corrections [10] - The ETF consists of 104 holdings, primarily from established companies, reducing the risk associated with any single investment [12] - The ETF is attractively priced with an average P/E ratio of approximately 20, compared to nearly 24 for the S&P 500, and offers a 3.4% dividend yield [13]

Core Insights - U.S. dividend income funds have attracted $24.1 billion in inflows in 2023, the highest first-quarter inflows in four years, indicating a significant shift in investor preference towards dividend-paying stocks [1][7] - The trend reflects a growing inclination among market participants to use dividend-paying equities as a strategy to navigate volatility and balance portfolio risks amid uncertainty regarding global interest rates and economic growth [1][7] Fund Performance - Major exchange-traded funds (ETFs) have benefited from this shift, with the Schwab U.S. Dividend Equity ETF attracting approximately $4 billion, the Capital Group Dividend Value ETF drawing over $3 billion, and the VanEck MSCI Developed Markets Dividend Leaders UCITS ETF receiving more than $2 billion in inflows [2][7] - Dividend funds are gaining traction due to their higher exposure to energy stocks, particularly oil and natural gas companies, which have improved profitability due to rising crude prices driven by geopolitical tensions [2][7] Market Context - The renewed interest in dividend funds coincides with turbulence in global bond markets, where rising inflation concerns have led to a significant sell-off, prompting investors to reassess expectations for rate cuts by major central banks [5][7] - In this environment, dividend-paying equities are increasingly viewed as a partial alternative to fixed-income investments, providing both income and protection against inflation [5][6][7] Investor Strategy - The shift towards dividend income funds highlights a broader recalibration in investor strategy, as market participants seek resilience and steady returns in an increasingly uncertain global landscape [6][7]

Core Viewpoint - The Schwab U.S. Dividend Equity ETF has undergone its annual reconstitution, increasing its allocation to high-yielding dividend stocks in the healthcare sector, which is expected to enhance long-term income generation for investors [1][3][4]. Group 1: ETF Strategy and Reconstitution - The Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index, which selects stocks based on dividend quality characteristics such as yield and financial strength [2]. - In the recent reconstitution, the index removed 22 existing holdings and added 25 new stocks, with significant additions including UnitedHealth at a 4% allocation and Abbott Laboratories at 3.95% [3]. Group 2: Sector Allocation Changes - The ETF's exposure to the healthcare sector increased from 15.4% to 18.9%, making it the second-highest sector allocation after consumer staples [3]. - Notable deletions included AbbVie, which had a previous allocation of 3.31%, although it remains a strong dividend stock [5]. Group 3: Dividend Yield and Growth - Post-reconstitution, the ETF's holdings maintain a similar yield of 3.4%, but the new stocks have a higher average dividend growth rate of 9.4% over the last five years compared to 8.6% prior [4]. - AbbVie has increased its dividend by 5.5% recently and has raised its payout by 330% since its spinoff from Abbott Labs, with a current yield of 3.3% [5].

Core Viewpoint - The Vanguard S&P 500 ETF has underperformed in 2026 compared to the Schwab U.S. Dividend Equity ETF, which has benefited from a shift towards value and defensive stocks [2][12]. Performance Comparison - The Schwab U.S. Dividend Equity ETF is up 11% year to date as of March 27, while the Vanguard S&P 500 ETF is down about 1%, indicating a significant performance gap [2]. - The Vanguard S&P 500 ETF was one of the best performers in the U.S. equity market for three years prior to this shift [1]. Sector Allocation - The Schwab U.S. Dividend Equity ETF has a current allocation of 19.2% in consumer staples, 18.6% in healthcare, and 16.5% in energy, reflecting a defensive investment strategy [6]. - The ETF's energy allocation was nearly doubled in its 2025 reconstitution, contributing to its recent outperformance [4]. Market Trends - The U.S. stock market has seen a rotation towards value, defensive, and small-cap stocks, with a notable reversal in March 2026 [9]. - The economic environment is deteriorating, with slowed GDP growth and rising unemployment, which may favor defensive stocks [13]. Future Outlook - If the conflict in Iran is resolved, there could be a return to pre-war market conditions, potentially benefiting value and dividend stocks [14]. - The Schwab U.S. Dividend Equity ETF is positioned to benefit from either a resolution of the conflict or a slowing economy, making it a favorable investment choice [14].

Core Insights - Historical data indicates that dividend growers and initiators in the S&P 500 have delivered significantly higher total returns (10.2% annualized) compared to companies that did not increase dividends (6.8%) or those that do not pay dividends (4.3%) [1] ETF Options for Dividend Growth - The Schwab U.S. Dividend Equity ETF (SCHD) tracks the Dow Jones U.S. Dividend 100 Index, focusing on 100 high-yielding dividend stocks with consistent dividend payment records, achieving a trailing 12-month dividend yield of 3.3%, nearly triple that of the S&P 500 [3][4] - The iShares Core Dividend Growth ETF (DGRO) screens companies with at least five consecutive years of dividend increases, holding nearly 400 stocks, and has delivered an annualized total return of at least 11% since its inception in 2014 [7][8] - The Vanguard Dividend Appreciation ETF (VIG) requires companies to have increased dividends for at least 10 consecutive years, providing broad diversification with over 335 qualifying companies, and has delivered an annualized total return of more than 10% since its inception in 2006 [9][10] Performance of Dividend Growth ETFs - SCHD has delivered an annualized total return of over 11% across various time frames, including since its inception in 2011, with a total return of 13.3% [6] - DGRO has also achieved at least an 11% annualized total return over the past one-, three-, five-, and ten-year periods [8] - VIG has shown strong performance with an annualized total return of more than 10% since its inception in 2006 [10] Investment Strategy - SCHD, DGRO, and VIG focus on high-quality dividend growth stocks, a strategy that has historically provided strong returns for investors, suggesting continued potential for future performance [11]

Core Insights - The Schwab U.S. Dividend Equity ETF (SCHD) has over $85 billion in net assets and a yield of 3.3%, outperforming the S&P 500 with a year-to-date increase of 10.8% compared to a 5% decline in the index [1] - The ETF's significant exposure to the energy sector, which constitutes 23.9% of its holdings, is a key factor in its performance [1][2] Group 1: ETF Composition and Performance - The ETF consists of 101 holdings, with 12 being energy stocks, including major companies like ConocoPhillips and Chevron [3][4] - ConocoPhillips is the largest holding at 5%, followed by Chevron at 4.8%, while ExxonMobil is notably absent from the fund [4] - The ETF's performance is closely tied to oil prices, benefiting from higher prices that enhance profit margins for exploration and production companies [5] Group 2: Risk and Diversification - The concentration in energy stocks may raise concerns for risk-averse investors who prefer diversification, as energy stocks can be volatile [2][9] - Despite the concentration, no single stock exceeds 5% of the ETF, and 34.7% of the ETF is allocated to more stable sectors like consumer staples and healthcare [10] - For investors seeking lower energy exposure, alternatives like the iShares Select Dividend ETF (DVY) are available, which has less than 10% in energy stocks [11]

Core Insights - Schwab U.S. Dividend Equity ETF (SCHD) is a thematic investment focused on dividend-paying stocks, managing $85 billion in assets [1] Group 1: Investment Strategy - The ETF does not target a specific sector or niche but uses fundamental screens to create a diversified portfolio updated annually [2] - The screening process emphasizes identifying high-quality companies that are likely to be resilient during adverse conditions [3] Group 2: Screening Process - Companies must have at least 10 years of annual dividend increases to be considered, excluding REITs [4] - A composite score is calculated based on cash flow-to-total debt, return on equity, dividend yield, and five-year dividend growth rate [4] - The top 100 highest-ranked stocks are included in the index using a market cap weighting approach, giving larger stocks a greater impact on performance [6] Group 3: Performance and Market Behavior - The ETF's portfolio is updated annually, allowing it to shift away from overpriced stocks, which typically have lower yields [7] - The value of the ETF and its dividends have generally increased over time, indicating strong performance [8]

Core Viewpoint - The stock market, represented by the S&P 500 index, has declined by 5.4% year-to-date as of March 24, indicating a broader downturn affecting many companies' stocks, which in turn enhances the dividend yield for dividend-paying stocks [1] Group 1: Investment Recommendation - The Schwab U.S. Dividend Equity ETF (SCHD) is recommended for long-term investment, suitable for various investment amounts ranging from $10,000 to $100,000 [2] - The ETF offers a dividend yield of 3.3%, significantly higher than the S&P 500's yield of 1.1%, providing both price appreciation and dividend income [2] - The ETF has shown strong performance with average annual gains of 12.90% over the past 3 years, 8.92% over the past 5 years, and 12.36% over the past 10 years [3] Group 2: ETF Composition and Holdings - The Schwab U.S. Dividend Equity ETF tracks an index of approximately 100 healthy dividend-paying companies, providing diversified exposure [3] - The top 10 holdings in the ETF include major companies such as Chevron (5.31% yield), Verizon Communications (5.56% yield), and Coca-Cola (2.76% yield), among others [3] - This ETF is positioned as a robust investment option, likely to continue paying dividends even during market downturns, making it a reliable choice for passive income [3]

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].

Core Insights - Many investors may benefit more from buying a diversified portfolio of high-quality companies rather than trying to pick individual winners and losers in real time [1] - All-weather ETFs are designed to perform well across various market conditions, providing stability during turbulent times [2][3] ETF Analysis - The Vanguard Total Stock Market ETF (VTI) is highlighted as a core portfolio holding, offering exposure to the entire U.S. market, including mid- and small-cap stocks, which can enhance long-term growth potential [5][6] - The Invesco Nasdaq 100 ETF (QQQM) has performed well due to the tech sector's growth, particularly driven by the AI boom, although it carries risks associated with heavy sector concentration [8][9] - The Schwab U.S. Dividend Equity ETF (SCHD) focuses on financially healthy companies with a history of dividend payments, providing stability through sectors like energy, consumer staples, and healthcare [10][11] - The Vanguard Total World Stock ETF (VT) offers international equity exposure, with a composition of approximately 60% U.S. stocks, 30% developed-market stocks, and 10% emerging-market stocks, allowing for a diversified global investment strategy [13][14]