Alright, let’s clear up the big question: What is SCHD ETF and why do so many investors swear by it?
SCHD, short for Schwab U.S. Dividend Equity ETF, gives you a shot at steady income and long-term growth by tracking the Dow Jones U.S. Dividend 100 Index. If you’re looking for a fund that focuses on high-quality U.S. companies with strong dividend histories, SCHD stands out for its smart selection process, low fees, and reliable payouts.
From here, you’ll see exactly how SCHD works, what stocks it holds, and how it compares to other popular dividend ETFs. If you want a fund that can help you build a stable income stream-whether you’re just starting out or planning for retirement-this is looking really good. We’ll break down the facts, share real-world examples, and give you the tools to decide if SCHD fits your investing style.
What Is SCHD ETF?
Master the fundamentals before you invest. The Schwab U.S. Dividend Equity ETF (SCHD) is a low-fee, passively managed portfolio that follows the Dow Jones U.S. Dividend 100 Index. SCHD holds 100 quality large-cap U.S. equities with a history-behind each of them are at least 10 consecutive years of dividend payments. This strategy is designed to provide you with consistent income and solid long-term growth. You can read more at Official SCHD fund information from Charles Schwab.
If you’re interested in a fund that doesn’t solely pursue yield, SCHD employs a strict screening process. It seeks companies with solid cash flow, solid balance sheets, and a history of increasing dividends. The fund spreads its bets by sector, avoiding real estate investment trusts (REITs) to maintain sector balance.
Here’s why SCHD gets so much attention from income seekers and long-term investors:
- Focuses on blue-chip dividend stocks with at least a decade of payouts.
- Uses a rules-based approach for stock selection, not manager guesswork.
- Keep costs low, so more of your money stays invested.
- Aims for both steady income and growth, not just one or the other.
Now we’ll break down exactly how SCHD’s structure and selection process work, so you can see if its strategy lines up with your goals.
Understand SCHD ETF Structure and Selection Methodology
Begin with a consideration of how SCHD selects its stocks and constructs its portfolio. SCHD follows the Dow Jones U.S. Dividend 100 Index for Quality, so all the companies within the fund will have a minimum of 10 years of dividend history. That way, businesses that cannot consistently make payments are screened out-no fly-by-night stocks here.
If you’re worried about too much risk in one area, SCHD has your back. The fund excludes real estate investment trusts (REITs) to keep sector balance and uses several financial health checks:
- Cash-flow to debt ratio
- Return on equity
- Dividend yield
- Dividend growth rate
SCHD limits any one stock to 4% of the fund and any sector to 25%. Therefore, you won’t see the fund loaded up with the stocks of the tech or energy sector. The managers quarterly rebalance the fund and examine all of the holdings once a year in order to stay on track.
Key Takeaways:
- Follows a rules-based index with a 10+ year dividend payment requirement
- Excludes REITs to avoid sector overload
- Screens for strong fundamentals and dividend growth
- Caps individual stocks and sectors to keep diversification tight
- Rebalances quarterly, reviews annually
Next up, we’ll dig into SCHD’s actual holdings and how it spreads your money across different sectors.
Analyze SCHD ETF Holdings and Sector Allocation
Take a peek under the hood and you’ll notice SCHD isn’t some arbitrary grab bag of stocks. The fund holds 100–103 large-cap American stocks. Each has a good track record of paying dividends and surviving stringent quality screens. The biggest holdings as of 2025 are names you should recognize: ConocoPhillips, Verizon, Coca-Cola, Lockheed Martin, Home Depot, Cisco, Texas Instruments, AbbVie, Amgen, and BlackRock. Each of these big guns typically represents around 3.5%–4.5% of the portfolio.
If you care about diversification, SCHD spreads your money across several sectors. Here’s how the sector allocation stacks up:
- Energy: ~21%
- Consumer Staples: ~19%
- Health Care: ~16%
- Industrials: ~12%
- Financials: ~8%
- Lower exposure to Information Technology and other more volatile sectors
Over 60% of SCHD’s assets sit in companies with market caps above $70 billion. That means you’re getting exposure to some of the most stable, established businesses in the U.S.
| Holding | Ticker | % of Portfolio |
|---|---|---|
| Texas Instruments Inc | TXN | 4.32% |
| Cisco Systems Inc | CSCO | 4.24% |
| Chevron Corp | CVX | 4.18% |
| ConocoPhillips | COP | 4.15% |
| Merck & Co Inc | MRK | 4.08% |
SCHD Top Holdings
| Sector | % Allocation |
|---|---|
| Energy | 21.08% |
| Consumer Staples | 19.06% |
| Health Care | 15.68% |
| Industrials | 12.45% |
| Financials | 8.36% |
SCHD Sector Allocation
Okay, now that you understand why SCHD’s blend of blue-chip dividend stocks and industrial diversification is known for stability and reliable income. If you want to get more in-depth with the figures, feel free to look into the [SCHD Dividend Calculator Guide] for an interactive way of estimating your returns.
Ready to move on? If yes, I’ll break down SCHD’s performance, yield, and fees in the next section.
Evaluate SCHD ETF Performance, Yield, and Fees
First, consider the numbers. SCHD’s track record of performance makes it a standout among dividend ETFs, and that’s why long-term investors and income hunters love it. In the last decade, SCHD averaged a rate of between 9.24% to 10.55% annually, depending on your tax status. In the last five years, the fund returned between 13.85% to 16.29% annually. Even last year, when the markets were careening all over the place, SCHD had a 4.49% to 6.75% return. [Source: MorningStar]
If you need income, SCHD’s dividend yield is around 4%. That’s more than many broad-market funds and even some other dividend ETFs. The fund also has low costs, as its expense ratio is just 0.06%. That keeps your money in your pocket, not the fund manager’s.
SCHD also boasts low portfolio turnover, which can help with tax efficiency. If you’re planning for retirement or want to minimize tax headaches, this is a big plus.
| Time Period | Annualized Return | Dividend Yield | Expense Ratio |
| 10 Years | 10.58% | 3.97% | 0.06% |
| 5 Years | 12.23% | 3.97% | 0.06% |
| 1 Year | 3.92% | 3.97% | 0.06% |
SCHD Dividend Growth Rates
This is looking really good if you want a mix of growth, income, and low fees. Want to see how your own portfolio could benefit? The SCHD’s Dividend Yield & Growth article helps go deeper into yield trends and payout growth.
Next up, let’s talk about why SCHD is so popular and how investors use it in real portfolios.
Explain SCHD ETF’s Popularity and Use Cases
Look at why so many investors keep SCHD at the core of their portfolios. SCHD is a favorite among investors because it generates steady income and smooths your ride during market ups and downs. The fund’s focus on stable, rising dividends makes it an informed option for those saving for retirement or looking to grow income.
To sidestep unattractive surprises, SCHD’s screens for quality minimize the threat of dividend cuts. Its defensive sector bias-more consumer staples and health care, fewer wild tech swings-reduces volatility. Investors employ SCHD frequently in IRAs and 401(k)s, where compounding and stable income are most important.
Ways Investors Use SCHD:
- Hold SCHD as a core piece in retirement accounts for stable, growing payouts.
- Reinvest dividends to take advantage of compounding over the years.
- Pair SCHD with broader index funds to balance growth and income.
- Use SCHD as a defensive anchor when markets get rocky.
Alright, from here, you’ll see how SCHD stacks up against other top dividend ETFs. Ready for a head-to-head comparison? Let’s keep going.
Compare SCHD ETF with Other Leading Dividend ETFs
Let’s stack SCHD up against its main rivals. If you’re comparing dividend ETFs, the two big names you’ll hear besides SCHD are Vanguard Dividend Appreciation ETF (VIG) and Invesco S&P 500 High Dividend Low Volatility ETF (SPHD). Each one takes a different approach to income and growth.
Here’s a quick table to make things easy:
| ETF | Holdings | Expense Ratio | Yield | Focus |
| SCHD | ~100 | 0.06% | ~4% | Quality, yield, growth |
| VIG | 400+ | 0.06% | ~2.0% | Dividend growth |
| SPHD | 50 | 0.30% | ~5.0% | High yield, low volatility |
How does SCHD stand out?
- SCHD offers a higher yield than VIG, thanks to its focus on high-dividend payers.
- Unlike SPHD, SCHD screens for quality, not just yield, helping you avoid risky stocks.
- Both SCHD and VIG keep fees low and are tax-efficient, but SCHD’s strategy is more selective.
If you prefer a fund that balances yield, quality, and growth, SCHD is tough to beat. But if you prefer the maximum yield or want a more diversified mix, VIG and SPHD may be what you’re looking for.
Now let’s address the most common questions about SCHD ETF so you can make an informed decision for your portfolio.
Common Questions About SCHD ETF (FAQ)
Get answers to the questions real investors ask about SCHD. If you’re still on the fence, these quick facts might help you decide if SCHD fits your needs.
Yes, SCHD is built for steady, growing dividends. Its focus on quality and dividend growth makes it a favorite for retirement accounts and anyone looking to live off their portfolio.
SCHD uses a rules-based screening process. Every company must have paid dividends for at least 10 years, show strong fundamentals, and pass strict quality checks. This keeps the fund packed with reliable, blue-chip dividend stocks.
SCHD isn’t as diversified as total market ETFs. It has higher concentration in sectors like energy and consumer staples, and it can lag during tech-driven bull markets. If you want exposure to every corner of the market, you may want to pair SCHD with a broader fund.
Absolutely. Many investors use SCHD as the backbone of their dividend strategy. It’s often paired with total market or S&P 500 funds for balance.
Put it all together and you understand why SCHD continues to find its way into so many investors’ portfolios. The call for high-grade dividend ETFs such as SCHD remains robust, particularly when markets become jittery or rates are uncertain. For steady returns and income, SCHD offers a wise blend-blue-chip stocks, good dividend growth policy, and modest expense ratio.
If you prefer a balanced investment strategy, couple SCHD with an ETF in the broad market. Have reinvested dividends so that the power of compounding can grow the money over the long run. Review your holdings and positions within sectors at times to ensure they remain according to your goals.
Key Takeaways:
- SCHD focuses on companies with a 10-year dividend history and strong fundamentals.
- The fund’s low fees and disciplined process help maximize your returns.
- It’s a great fit for retirement income, core portfolios, or anyone who values stability and steady payouts.
So, is SCHD the best dividend fund for you?
If you’re looking for a blend of income, growth, and quality, this ETF is tough to beat. Alright, now you know what an SCHD ETF is and how it can power up your investing strategy.