The Schwab U.S. Dividend Equity ETF (SCHD)

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The Schwab U.S. Dividend Equity ETF (SCHD)


The Schwab U.S. Dividend Equity ETF (SCHD) is a prominent exchange-traded fund that focuses on U.S. companies with a strong history of dividend payments. Here's a detailed breakdown of its key aspects:


1. Investment Strategy and Holdings

SCHD tracks the Dow Jones U.S. Dividend 100 Index, comprising 100 U.S. companies that have consistently paid dividends for at least 10 consecutive years. This strategy emphasizes financial stability and a commitment to returning value to shareholders. The ETF's portfolio is diversified across various sectors, including information technology, health care, and consumer discretionary, with top holdings in companies like Texas Instruments, Home Depot, and PepsiCo.


2. Dividend Yield and Payouts

SCHD offers an attractive dividend yield, typically ranging between 3% and 4%, which is higher than the average yield of the S&P 500. Dividends are distributed quarterly, providing investors with regular income. The ETF's focus on companies with a history of increasing dividends contributes to its appeal for income-focused investors. 


3. Performance and Volatility

Over the past decade, SCHD has demonstrated strong performance, with an average annual return of approximately 10%. While it has experienced periods of volatility, such as a maximum drawdown of about 12% during market downturns, its focus on dividend-paying companies has helped mitigate some of the risks associated with more volatile growth stocks.


4. Expense Ratio and Accessibility

SCHD boasts a low expense ratio of 0.06%, making it a cost-effective option for investors seeking exposure to dividend-paying U.S. equities. This low cost, combined with its robust performance and attractive dividend yield, makes SCHD a compelling choice for both income and growth-oriented investors.


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