{"id":282,"date":"2024-07-08T17:27:10","date_gmt":"2024-07-08T17:27:10","guid":{"rendered":"https:\/\/dorseyentertains.com\/?p=282"},"modified":"2025-01-03T10:30:41","modified_gmt":"2025-01-03T10:30:41","slug":"schd-should-you-buy-schwab-us-dividend-equity-etf","status":"publish","type":"post","link":"https:\/\/dorseyentertains.com\/index.php\/2024\/07\/08\/schd-should-you-buy-schwab-us-dividend-equity-etf\/","title":{"rendered":"SCHD: Should You Buy Schwab US Dividend Equity ETF?"},"content":{"rendered":"

If you\u2019re looking for a high-quality dividend ETF then there\u2019s a good chance that you\u2019ve come across the Schwab US Dividend Equity ETF (Nysearca: SCHD) before. This ETF is highly regarded by investors. So much so that CNBC and Morningstar have called it the gold standard for dividend funds<\/a>. Is this ETF a must-have for your dividend portfolio? Or, are there better options out there?<\/p>\n

What\u2019s an ETF?<\/b><\/h3>\n

As a quick reminder, an exchange-traded fund (ETF) is a financial product that tracks an underlying index, sector, or asset class. If a stock were a fruit then buying an ETF is a bit like buying a fruit basket, you get many small pieces from lots of different fruits.<\/p>\n

Many investors prefer buying ETFs because they help you easily diversify your portfolio. Buying shares of an ETF essentially means you never have to worry about picking the right stocks.<\/p>\n

For example, let\u2019s say that you\u2019re bullish on the future of AI. But, you aren\u2019t sure which company(s) will emerge as leaders in AI over the coming years and you don\u2019t want to risk investing in the wrong companies. In this case, you could simply invest in an ETF that tracks a range of AI stocks instead of trying to handpick certain companies.<\/p>\n

You can read more about how ETF investing works here<\/a>. Now, let\u2019s discuss Schwab US Dividend Equity ETF (SCHD).<\/p>\n

What is SCHD?<\/b><\/h2>\n

The Schwab US Dividend Equity ETF<\/a> is a passive ETF whose goal is to \u201ctrack as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100\u2122 Index.\u201d <\/i>This means that SCHD tracks the top 100 biggest, most reliable dividend-paying companies in America.<\/p>\n

Buying shares in this fund is a low-cost and tax-efficient way for investors to get access to some of the most financially stable companies that pay consistent, reliable dividends. If you buy shares in SCHD then you won\u2019t have to worry about researching individual dividend stocks. <\/p>\n

Additionally, an expense ratio of 0.06% means you will only pay $0.60 in fees for every $1,000 that you invest. This is much lower than many actively managed funds. But, still not as cheap as doing your own research.<\/p>\n

The SCHD focuses on the quality and sustainability of dividends, mainly looking for companies that increase their dividends over time. Its five biggest holdings are:<\/p>\n

    \n
  1. Cisco Systems (Nasdaq: CSCO)<\/b> which makes up 4.12% of the index<\/li>\n
  2. AbbVie (NYSE: ABBV)<\/b> which makes up 4.11% of the index<\/li>\n
  3. Home Depot (NYSE: HD) <\/b>which makes up 4.06% of the index<\/li>\n
  4. Amgen (Nasdaq: AMGN)<\/b> which makes up 4.04% of the index<\/li>\n
  5. Chevron (NYSE: CVX)<\/b> which makes up 4.04% of the index<\/li>\n<\/ol>\n

    This stock-based index is most concentrated in the following five industries:<\/p>\n

      \n
    1. Financials<\/b> which makes up 17.42% of the index <\/li>\n
    2. Healthcare<\/b> which makes up 15.71% of the index <\/li>\n
    3. Consumer Staples<\/b> which makes up 13.89% of the index <\/li>\n
    4. Industrials <\/b>which makes up 13.51% of the index <\/li>\n
    5. Energy<\/b> which makes up 12.84% of the index <\/li>\n<\/ol>\n

      Should You Buy SCHD?<\/b><\/h2>\n

      This depends on your investment strategy and goals. However, if you\u2019re an investor looking to get exposure to a wide range of high-quality dividend stocks then SCHD certainly presents a good solution. This fund has a long and proven history of consistently increasing its dividend payout. <\/p>\n

      Here\u2019s a quick snapshot of its dividend payments over the past few years (it pays dividends quarterly):<\/p>\n