Discovering a Strong Investment Fund: SCHD ETF

“Invest in yourself. Your career is the engine of your wealth.” — Paul Clitheroe

Investing in the stock market can be intimidating, especially if you’re new to the “game”. But with the right strategy and some research, investing can be (and has been for millions of people) a great way to build long-term wealth. Investing really does not have to be difficult. So many people like to overcomplicate it to make themselves feel some type of way. It is especially simple when you invest in something called an Exchange-Traded Fund or ETFs. If you’re looking for a solid ETF that you can buy and hold for the long haul (like the rest of your life), you might want to consider SCHD (Schwab U.S. Dividend Equity ETF). This article will discuss what SCHD invests in, its top 10 holdings, its dividend rate, and its historic 10-year return.

“By selecting SCHD, investors get cost efficiency and large-cap exposure with a focus on quality and dividends over time. It’s a solid choice for those looking for a well-diversified investment option.” -Jeff Jones, CEO of Schwab Wealth Investment Advisory

What Does SCHD ETF Invest In?

SCHD is an ETF that seeks to track the performance of the Dow Jones U.S. Dividend 100 Index. This index consists of 100 high-quality U.S. stocks that have a history of paying consistent dividends and have a strong track record of delivering strong growth. The stocks included in the index come from various sectors, including utilities, healthcare, finance, tech and consumer products.

According to Eric Balchunas, an ETF analyst at Bloomberg Intelligence, “SCHD is composed of U.S. companies that have a proven track record of paying dividends, which is a reliable indicator of financial health and cash flow stability.” This means that SCHD invests in companies that are financially stable and have a history of delivering consistent returns to their shareholders. Not too shabby, right? Of course not!

What are the Top 10 Holdings in SCHD ETF?

As of June 2023, SCHD’s top 10 holdings include well-known companies such as Coca-Cola, Cisco, Johnson & Johnson, Procter & Gamble, and AbbVie. These companies, which account for a significant portion of SCHD’s total holdings, have a track record of delivering strong returns to their investors over time.

A quote by Eric Balchunas, an ETF analyst, says, “SCHD’s portfolio is composed of stocks with built-in growth, given that companies with the financial wherewithal to pay dividends and raise them over time tend to be quality businesses.”

“Money is a terrible master but an excellent servant.” — P.T. Barnum

What is SCHD ETF’s Historic 10-Year Return?

According to Morningstar, SCHD’s 10-year annualized return has been around 11.75%, placing it in the top quartile of large-cap value funds. This impressive performance is due in part to the stable dividends paid by the companies included in the fund. Over the last decade, SCHD’s dividend yield has consistently stayed above the average of the S&P 500 index.

A quote from Michael Lachini, CEO of Winthrop Capital Management in an interview with U.S. News states, “SCHD doesn’t set out to beat the market each year. Instead, it aims for a smoother ride with dividends. Over the long term, it should provide similar returns to the market, but with less volatility. Investors shouldn’t expect the stars, but rather a boring, but stable, performance.” Sometimes, especially in today’s volatile environment, boring is the perfect pathway to financial success.

What is SCHD ETF’s Dividend Rate?

SCHD ETF is known for its high dividend yield. As of August 2023, its dividend yield was 3.35%, compared to the average yield of the S&P 500 index, which is around 1.4%. This high dividend yield provides investors with a great source of income, as well as a cushion against market volatility. If you’ve recently been investing since the time of Covid or have been a long-time investor, chances are you’ve got a taste of what market volatilely looks like.

A quote by Craig Lazzara, Global Head of Index Investment Strategy at S&P Dow Jones Indices says, “Dividend-focused indices like the Dow Jones U.S. Dividend 100 Index, tracked by SCHD, often screen for quality as well as yield. That can create a doubly powerful combination, as high-quality companies have tended to outperform lower-quality ones over time.”

For investors who are looking for a well-diversified, low-cost investment option, SCHD ETF is definitely worth considering. Its portfolio is made up of financially stable, dividend-paying companies that have a track record of delivering strong returns over time. With its high dividend yield and historic 10-year return, SCHD ETF is a steady performer that can be a valuable addition to any long-term investment portfolio. Heck, even THE investment position.

By keeping it simple through buying and holding SCHD ETF, investors (like yourself) can avoid the anxiety and stress that often come with active trading strategies. As the legendary investor Warren Buffet once said, “The stock market is a device for transferring money from the impatient to the patient.” With SCHD as a component in your portfolio, you’ll be on your way to becoming one of the patient ones.

This is not financial advice. For educational purposes only. Before making any financial decisions, consult with a professional.