For investors prioritizing a steady stream of passive income, the Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD) has emerged as a standout choice. This popular exchange-traded fund (ETF) is celebrated for its strategic focus on companies that not only offer high dividend yields but also boast a consistent track record of reliable payouts. SCHD provides a focused approach to income generation, making it a valuable addition to many portfolios.
At its core, SCHD tracks the performance of the Dow Jones U.S. Dividend 100 Index, which is composed of 100 large-cap U.S. companies. The selection criteria are rigorous, emphasizing businesses with robust fundamentals, impressive cash flows, and a history of shareholder returns. As of late June, SCHD delivered a compelling dividend yield of approximately 3.9%, which is more than double the yield typically offered by the broader S&P 500. This attractive payout is further enhanced by the ETF's remarkably low expense ratio of just 0.06%, meaning more of your investment goes directly to work for you.
SCHD's portfolio is intentionally structured for stability. Its top ten holdings, which collectively represent about 40% of the fund's assets, include well-established names like Texas Instruments, Cisco Systems, ConocoPhillips, and Chevron. These holdings are relatively evenly distributed, preventing over-reliance on any single stock. The fund's inclination toward what some might call "boring" companies is actually a strategic advantage, often translating to greater resilience and consistent performance, particularly during market downturns when more speculative assets falter.
While SCHD offers a powerful blend of high dividend yield, exposure to quality companies, and low fees, it's generally recommended as a supplementary holding rather than the sole foundation of a portfolio. This is because its specific index criteria lead to less diversification than a broad-market fund, such as a total stock market ETF or an S&P 500 ETF. Nevertheless, for investors whose primary objective is to generate dependable passive income from high-quality dividend payers, SCHD remains one of the premier ETF options available in the market today.
The Schwab U.S. Dividend Equity ETF (SCHD) is a popular choice for passive income, offering a 3.9% dividend yield and a low 0.06% expense ratio. It invests in 100 large U.S. companies with strong fundamentals and cash flows, providing stability through its focus on "boring" yet reliable businesses. While best used as a supplemental holding for diversification, SCHD is a top ETF for income-focused investors.
Before you invest in the Schwab U.S. Dividend Equity ETF, consider this... It's Our #1 Defense Stock for July Dear Fellow Investor, China just deepened its military alliance with America's enemies in the Middle East... By conducting joint naval drills with Iran and Russia. They're also striking energy deals that bypass U.S. sanctions and funding advanced weapons programs in anti-Israel nations. This could easily escalate Israel's regional conflict into a direct confrontation with the U.S. And that would be a nightmare scenario for America. We've already lost 18 straight simulated war games against China. The good news is, the U.S. military has a plan to upgrade our weapons and defense systems to prepare for modern warfare. And early investors could see gains as high as 2,476% with the small laser company leading this upgrade. Here's the ticker >>> | 