Is Schwab U.S. Dividend Equity ETF (SCHD) a Buy in a Post-AI Market?

The Schwab U.S. Dividend Equity ETF (SCHD) has long been a cornerstone for income-focused investors, offering exposure to high-quality dividend-paying stocks with a focus on sustainability and growth. However, the rapid evolution of artificial intelligence (AI) in 2025 has reshaped market dynamics, particularly in sectors like energy, consumer staples, and healthcare. This article evaluates whether SCHD remains a compelling buy in this post-AI environment, analyzing its dividend quality, sector positioning, and adaptability to shifting economic and technological trends.

Dividend Quality: A Pillar of Stability

SCHD's dividend quality metrics remain robust, underpinned by its focus on companies with strong financial fundamentals. As of November 2025, the ETF has delivered a five-year dividend compound annual growth rate (CAGR) of 12.2%, with total distributions expected to exceed $3.45 per share in 2025. Its portfolio emphasizes firms with consistent dividend growth, sustainable payout ratios, and high return on equity (ROE), ensuring resilience even in volatile markets. The ETF's trailing dividend yield of 3.6% as of 2025 outperforms broader dividend peers like VYM and DVY, while its low expense ratio of 0.06% enhances its appeal for long-term investors.

Sector Positioning in a Post-AI Market

SCHD's sector allocations have been strategically adjusted to align with post-AI market realities. The 2025 reconstitution increased Energy's weight to 19.3%, making it the largest sector in the ETF. This shift reflects the sector's critical role in powering AI infrastructure, as data centers now account for 3% to 4% of U.S. electricity use, with projections of 11% to 12% by 2030. Energy giants like Chevron and ConocoPhillips, key holdings in SCHD, are well-positioned to benefit from this surge in demand, despite near-term oil price volatility.

Energy: A High-Growth Defensive Play
The Energy sector's inclusion in SCHD offers a unique blend of defensive and growth characteristics. While traditionally cyclical, the sector's cash-generating capabilities and alignment with AI-driven energy needs have bolstered its appeal. For instance, U.S. government policies supporting fossil fuel infrastructure and the need for natural gas in power generation have created tailwinds for Energy stocks. This strategic exposure positions SCHD to capitalize on both capital appreciation and dividend growth in a post-AI world.

Consumer Staples: Navigating Uncertainty
Consumer Staples, at 18.5% of SCHD's holdings, has faced headwinds in 2025, lagging behind the broader market. Shifting consumer behaviors, economic volatility, and regulatory pressures have clouded the sector's dividend sustainability. However, its historical resilience-rooted in inelastic demand for basic goods-suggests that high-quality staples within SCHD could stabilize as macroeconomic conditions normalize. Investors must weigh these defensive traits against near-term challenges.

Health Care: AI-Driven Opportunities
Health Care, at 16.1% of SCHD's portfolio, is experiencing a renaissance driven by AI adoption. While the sector's AI integration (8.3% as of 2025) lags behind finance and education, generative AI is transforming patient care and operational efficiency. For example, 1 in 5 consumers is open to using AI as a doctor's assistant, and healthcare providers are leveraging AI for diagnostics. This technological shift, coupled with attractive valuations (healthcare trades at 16x forward earnings vs. 30x for tech stocks), has driven inflows into the sector. Companies like Merck and AbbVie, with strong dividend yields and earnings growth, exemplify SCHD's ability to capture AI-driven value in healthcare.

Market Volatility and SCHD's Resilience

Despite its strengths, SCHD has faced short-term volatility. On November 18, 2025, the ETF declined 0.88% during regular trading and dipped further in pre-market sessions according to market data. This weakness reflects broader market jitters amid profit-taking in AI-driven sectors. However, SCHD's focus on quality dividend growers and its diversified sector exposure-particularly in Energy-suggest that its long-term fundamentals remain intact. The ETF's 8.4% year-to-date return as of 2025 outperforms many dividend-focused peers, underscoring its adaptability.

Conclusion: A Buy for Income and Growth

SCHD's combination of dividend quality, strategic sector positioning, and adaptability to AI-driven trends makes it a compelling buy in the post-AI market. For those seeking income stability and capital appreciation, SCHD's 3.6% yield, low costs, and focus on high-quality dividend growers position it as a resilient choice in a rapidly changing economic landscape.