SCHD is the golden egg for dividends

SCHD is the golden egg for dividends
Or perhaps, I should say it is the standard bearer for overall dividend investing.
Schwab US Dividend Equity ETF is a passively managed ETF that tracks the Dow Jones Dividend 100 Index. It focuses on dividend paying stocks. SCHD was launched in October 2011. It is a straightforward, low cost fund offering potential tax-efficiency. It can serve as part of the core or complement in a diversified portfolio. It places an emphasis on quality and sustainable dividends. SCHD invests in stocks selected for fundamental strength relative to their peers based on financial ratios.
SCHD has a history of excellent yield and capital appreciation. It has a focus on companies with strong cashflows and return on equity. The vast majority of people will not be able to beat its returns when choosing individual stocks. Its performance resembles the S&P 500 while also providing consistent healthy dividends. While there are other ETFs like JEPI that beat it on the basis of yield, their long-term performance just does not compare. It is a fool’s errand to chase yield alone as this results in underperformance.
In general, ETFs are safer than individual stocks. A dividend ETF is arguably the safest and most reliable ETF you can purchase.
The biggest selling point to me is the razor thin expense ratio of 0.06%.
However, I recognize that there is an argument to be made against SCHD. If we look at VOO, Vanguard 500 Index Fund ETF, it slightly outperforms SCHD, however SCHD is more stable and pays reliable dividends. VOO has a relatively low yield of less than 2% because it holds companies that don’t pay dividends, thus lowering the overall yield. However, this index has a track record of over 100 years and an average annual return exceeding 9%. Therefore, it can be argued that it is potentially safer and more diversified than SCHD. We also must keep in mind that share buybacks are more cost-effective in returning value to shareholders than dividends.
I would counter that SPY has more volatility than SCHD. The S&P 500 holds a significant amount of growth and technology companies. In contrast, SCHD is more defensive. SCHD contains about 100 companies.
SCHY is the international version of SCHD, but the expense ratio is significantly higher at 0.14%.
If you are a dividend investor, I would strongly encourage you to look into SCHD.
Works Cited:
https://www.financialtechwiz.com/post/voo-vs-schd
https://money.usnews.com/funds/etfs/large-value/schwab-us-dividend-equity-etf/schd
https://www.schwabassetmanagement.com/resource/schd-fact-sheet
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