Is it worth buying the Schwab U.S. Dividend Equity ETF at the present moment?
The Schwab U.S. Dividend Equity ETF (SCHD) is an index-tracking exchange-traded fund (ETF) that offers a mix of income and capital appreciation. Designed to appeal to dividend investors, this ETF is a solid choice for a simple investment life and could be the foundation of an income portfolio. SCHD follows the Dow Jones U.S. Dividend 100 Index, which removes real estate investment trusts (REITs) from consideration. The index only considers companies that have increased their dividends annually for at least 10 years. The screening process for the index includes an examination of cash flow to total debt, return on equity, dividend yield, and a company's five-year dividend growth rate. The 100 companies with the highest composite scores are included in the index and become part of the Schwab U.S. Dividend Equity ETF. Currently, SCHD has a total of 103 companies, with top holdings such as AbbVie (4.45%), Chevron (4.36%), The Home Depot (4.33%), Altria Group (4.29%), and PepsiCo (4.16%) among its major components. One of the key advantages of the Schwab U.S. Dividend Equity ETF is its dividend yield, which currently stands at 3.8%. This is significantly higher than the 1.2% yield of an S&P 500 ETF. Over time, both the dividend and price of the Schwab U.S. Dividend Equity ETF have trended higher. In terms of expenses, the Schwab U.S. Dividend Equity ETF has a current expense ratio of 0.06%, making it an attractive option for cost-conscious investors. For those looking for a dividend ETF, the Schwab U.S. Dividend Equity ETF is a good choice. It could also be paired with a single bond ETF to create a balanced portfolio. The ETF's focus on companies with a history of increasing dividends makes it a compelling compromise between quality, growth, and income. In conclusion, the Schwab U.S. Dividend Equity ETF is a well-designed ETF that offers a strong yield, a focus on quality companies, and a low expense ratio. It is a solid choice for a simple investment life and could be the foundation of an income portfolio.
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