Is the Schwab U.S. Dividend Equity ETF a Buy Now?

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I’m utterly smitten with the Schwab U.S. Dividend Equity ETF (SCHD), a widely admired index fund that follows the Dow Jones U.S. Dividend 100 index. This index and my beloved ETF have a keen eye for generous, high-quality dividend policies. Consequently, it’s all about the old reliable dividend payers in sectors like energy, consumer staples, and healthcare.

As a fervent investor, I can’t help but be captivated by the widespread appeal of the Schwab Dividend Equity Fund! Boasting an impressive $70.1 billion in assets under management, it ranks among the 30 most significant exchange-traded funds (ETFs) currently thriving in the market.

Instead, let’s explore if the Schwab U.S. Dividend Equity ETF is worth buying right now.

Investors are pouring money into this Schwab fund

Currently, this particular fund is experiencing a period of significant growth and popularity. Compared to the other four largest ETFs that focus on dividends, it has attracted the most capital investments during the past year, with a substantial lead. Over the course of the last 52 weeks, its assets have expanded by an impressive 24%, significantly outpacing the second-place competitor, the iShares Core Dividend Growth ETF (DGRO), which has only seen a 5% increase during the same period.

For income-focused investors, the stock prices themselves may not hold as much significance compared to other categories of investors, yet they recognize that a stock’s overall performance in terms of price is still an important factor to consider.

It’s worth mentioning that, over an extended period, the Schwab U.S. Dividend Equity fund typically lags behind broad market indices such as the S&P 500 in terms of performance. Over the past ten years, its average annual growth rate was 7.6%, while the S&P 500 saw an average increase of 11.5%. Even the iShares dividend ETF showed a better yearly growth of 9.3%, but neither fund could match the stock market’s overall price growth.

During this span, we’ve witnessed three presidential elections, the onset of the coronavirus pandemic, the rise of artificial intelligence (AI), and a cycle of inflation characterized by panic and recovery from 2022 to 2024. The price fluctuations experienced over such a varied timeframe can be considered a good reflection of typical long-term outcomes.

But wait, there’s more (dividends, that is)

The picture changes dramatically when you include dividend payouts in the performance charts.

Over the past ten years, the S&P 500’s typical dividend rate averaged at 1.7%. The iShares Dividend Fund hovered near a more substantial 2.3%, but it was the Schwab Dividend Equity ETF that led the pack. Its average yield reached 3.1%.

Consequently, the Schwab fund yielded an impressive annual return of 11.1%, consistently, during the past ten years. This figure takes into account any dividends being used to purchase additional shares of the same stock or fund, which is a significant benefit given its generous dividend distribution.

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Being out of favor can create opportunities

High-dividend large companies’ stocks haven’t been popular lately. The Schwab fund, for instance, has struggled in the last few months, currently sitting 9% below its yearly peak and 14% above its recent lows. On the other hand, the overall market is consistently hitting new price highs.

On the positive side of its gentle price curve, the Schwab U.S. Dividend Equity ETF currently provides a higher-than-average dividend yield of 4%. By purchasing shares now, you can secure this effective return. The fund’s primary investments are in renowned companies such as Coca-Cola, The Home Depot, and Chevron – businesses that have proven to be long-term cash generators and should withstand most economic hardships I can envision. Therefore, the dividend fund also functions as a direct investment in top-tier corporate titans, a move often associated with substantial and consistently growing dividend payments. This combination of quality investments and generous dividends is frequently linked to business giants that are known for their robustness and growth potential.

This fund is also a budget-friendly option, with an annual fee of just 0.06%. Furthermore, it seems that among all ETFs, only this Schwab fund tracks the specific Dow Jones U.S. Dividend 100 index you prefer.

Is the SCHD ETF right for you?

A dedicated income investor might structure their portfolio primarily around this strong Exchange-Traded Fund (ETF). Meanwhile, others may find it beneficial for gaining a more in-depth look at the high-dividend sector of the stock market or for tilting their holdings towards large-cap value investments.

Regardless of current market conditions, it seems prudent to investigate the Schwab U.S. Dividend Equity ETF as its price trend appears promising. While there’s no need for an immediate large investment, this ETF seems like a wise choice for purchasing at present.

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2025-07-20 03:55