Dividends & Dust

by

Passive Income

So, you want a little something for the long haul, do you? A way to maybe, just maybe, outrun the heat death of the universe? I get it. It’s a fool’s errand, of course. But a comfortable one, if you play your cards right. I’ve been looking at the numbers, and there’s this fund, the Schwab U.S. Dividend Equity ETF (SCHD +0.86%). It’s not a miracle cure, mind you. Just a reasonable attempt to build a little fortress against the inevitable. Dividends, you see, are the small comforts in a world determined to disappoint.

It’s an ETF, which is just a fancy way of saying a basket of stocks. They trade like a single stock, which is convenient. The world is obsessed with convenience, as if it will somehow stave off the void. It won’t.

The Allure of the Drip

Look at this table. It’s a cold, hard look at history. And history, as we know, is mostly just a collection of bad decisions. But within that mess, there’s a pattern. Companies that actually share some of their profits with their owners—the shareholders—tend to do better. It’s almost as if fairness has some intrinsic value. Go figure.

Dividend Status Avg. Annual Return (1973-2024)
Dividend Growers & Initiators 10.24%
Dividend Payers 9.20%
No Change in Policy 6.75%
Non-Dividend Payers 4.31%
Shrinking/Eliminating Dividends -0.89%
Equal-Weighted S&P 500 7.65%

See? It’s not a guarantee, naturally. Nothing is. But those dividends, they add up. They’re a little bit of sunshine in a mostly cloudy world. And they can be reinvested, which means you get more shares, which means… well, you get the idea.

The Schwab ETF: A Reasonable Choice

This Schwab fund tracks something called the Dow Jones U.S. Dividend 100 Index. It’s a mouthful, I know. Basically, it’s a collection of 100 companies that have been consistently paying dividends for at least ten years. They’re not fly-by-night operations. They’re the kind of companies your grandfather probably invested in. Solid, dependable… boring, maybe. But boring can be good. Especially when the world is going to hell in a handbasket.

Recent Yield 5-Yr Avg. Return 10-Yr Avg. Return 15-Yr Avg. Return
Schwab U.S. Dividend Equity ETF 3.5% 10.91% 13.55% 12.30%*
Vanguard S&P 500 ETF 1.1% 13.82% 16.09% 13.77%

I tossed in the Vanguard S&P 500 ETF for comparison. It’s a good fund, don’t get me wrong. But the Schwab fund gives you a little extra income while staying reasonably competitive. It’s a trade-off. A small comfort, perhaps. Here’s what the fund holds, roughly:

Stock Weight in ETF
Lockheed Martin 4.60%
Bristol-Myers Squibb 4.29%
Texas Instruments 4.27%
Chevron 4.21%
Merck 4.20%
ConocoPhillips 4.13%
PepsiCo 4.06%
Verizon Communications 4.01%
Altria 3.95%
Coca-Cola 3.93%

Why This Fund? Because Nothing Lasts, But Some Things Last Longer

Here’s the thing. It yields around 3.8%. That’s not going to make you rich, of course. But it’s better than a lot of other dividend funds. The expense ratio is ridiculously low – just 0.06%. They’re not gouging you, which is a pleasant surprise. And it’s not overly reliant on tech stocks. Only about 10% is in tech. That’s a good thing, because bubbles always burst. So it goes. It has a healthy dose of energy and consumer staples. Solid, dependable… boring. But remember, boring can be good.

Any long-term investor should take a look. It’s not a solution to the existential dread that plagues us all. But it’s a reasonable attempt to build a little fortress against the storm. And sometimes, that’s enough.

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2026-02-15 21:33