Unlock the Power of Dividend Stocks with the Schwab U.S. Dividend Equity ETF

The Schwab U.S. Dividend Equity ETF (SCHD) invests in the top 100 dividend-paying stocks in the Dow Jones U.S. Dividend 100 Index. The fund has an average dividend yield of 3.8% and a five-year dividend growth rate of 8.4%, outperforming the S&P 500. Its top holdings include consistent dividend stocks like PepsiCo, with a 53-year dividend increase streak. The fund's focus on dividend growth has enabled it to pay higher cash distributions to investors, with a current annualized dividend yield of 3.9%.

The Schwab U.S. Dividend Equity ETF (SCHD) stands out as a reliable income option for investors seeking consistent dividend distributions. As of July 2, 2025, SCHD invests in the top 100 dividend-paying stocks in the Dow Jones U.S. Dividend 100 Index. The fund boasts an average dividend yield of 3.8%, a five-year dividend growth rate of 8.4%, and a current annualized dividend yield of 3.9%.

SCHD's focus on dividend growth has enabled it to outperform the S&P 500. Its top holdings include consistent dividend stocks such as PepsiCo, which has maintained a 53-year dividend increase streak. This focus on dividend growth has translated into higher cash distributions for investors, making SCHD an attractive option for those prioritizing income.

The fund's methodology centers on dividend-paying U.S. companies with at least 10 years of sustained payments. This strategy has led to a 3.75% dividend yield, which is more than double that of the Schwab U.S. Broad Market ETF (SCHB). This higher yield makes SCHD particularly attractive to retirement portfolios and dividend growth investors.

SCHD's sector allocation highlights its focus on stability, with significant exposure to mature industries such as energy (19%), consumer staples (18.8%), healthcare (15.5%), and industrials (14%). Only 9% of the fund is allocated to technology, reflecting its conservative approach to growth. This sector concentration provides a stable foundation for dividend growth, although it limits the fund's potential for high growth in innovation-driven sectors.

In terms of performance, SCHD has compounded at an annualized rate of 11.5% over the past decade, outpacing the S&P 500's 10.3% CAGR. However, SCHD's performance is less volatile than the broader market, with a beta of 0.91 compared to the market's beta of 1.02. This lower volatility makes SCHD a more defensive option in risk-off environments.

Technically, SCHD trades comfortably above its 200-day moving average at $75.90, with resistance at $78.50 and support at $74.20. Its relative strength index (RSI) of 52 reflects consolidation, consistent with its income-driven investor base. This technical profile supports the fund's broader fundamental narrative: SCHD carries less short-term upside potential but offers steady income and lower volatility.

Institutional demand for SCHD has been strong, with $1.1 billion in net inflows year-to-date (YTD) as of July 2, 2025. This demand reflects the fund's appeal to income-focused investors, particularly pensions, retirement funds, and dividend-seeking institutions.

SCHD's expense ratio of 0.06% is slightly higher than SCHB's 0.03%, but the higher dividend yield offsets the cost for income-focused investors. For long-term accumulators, SCHD's cost efficiency is less of a concern, as the focus is on reinvested capital gains and compounding.

The Federal Reserve's policy stance in 2025 is expected to have asymmetric impacts on SCHD. If rates remain higher for longer, SCHD's 3.75% yield may struggle to compete with Treasuries, limiting inflows. Conversely, if the Fed begins rate cuts, SCHD's yield advantage could strengthen, drawing more institutional income flows.

In summary, the Schwab U.S. Dividend Equity ETF (SCHD) offers a reliable income option for investors seeking consistent dividend distributions. Its focus on dividend growth, conservative sector allocation, and lower volatility make it an attractive choice for income-focused portfolios. As of July 2, 2025, SCHD is well-positioned to provide steady income in a market environment where dividend stocks are in demand.

References:
[1] https://www.tradingnews.com/news/schb-etf-vs-schd-etf-growth-at-62-usd-against-dividend-power-at-77-usd
[2] https://www.nasdaq.com/articles/worried-about-stock-market-sell-august-consider-these-2-reliable-dividend-stocks-and-1-etf