Are you looking to add a dividend-focused investment to your portfolio? Look no further than the Schwab US Dividend Equity ETF, commonly referred to as SCHD stock. As one of the most popular dividend ETFs on the market, SCHD provides investors with a diversified portfolio of high-quality dividend-paying stocks.
What is SCHD Stock?
SCHD is an exchange-traded fund (ETF) that tracks the Dow Jones US Dividend 100 Index. This index is composed of the top 100 dividend-paying stocks in the US market, with a focus on quality and sustainability. The ETF uses a rules-based approach to select its holdings, ensuring that investors receive a consistent stream of income.
Why Invest in SCHD Stock?
Investing in SCHD stock offers several benefits for investors:
Income Generation: With a focus on dividend-paying stocks, SCHD provides investors with a regular source of income.
Portfolio Diversification: By investing in a diversified portfolio of high-quality dividend stocks, investors can reduce their exposure to individual stocks and sectors.
Low Cost: As an ETF, SCHD has a low expense ratio compared to actively managed funds.
Transparency: With its rules-based approach, investors have complete transparency into the selection process for SCHD's holdings.
How Does SCHD Stock Work?
SCHD works by tracking the performance of the Dow Jones US Dividend 100 Index. The ETF holds a portfolio of stocks that are selected based on their dividend yield and sustainability. The selection criteria include:
Dividend Yield: Stocks with a high dividend yield are more likely to be included in the portfolio.
Sustainability: Companies with strong financials, low debt-to-equity ratios, and a history of paying consistent dividends are given preference.
Performance of SCHD Stock
Since its inception in 2011, SCHD has consistently delivered strong performance. Here are some key metrics:
Total Return: SCHD has provided investors with a total return of over 15% per annum since its inception.
Yield: The ETF has a current yield of around 2.5%, providing investors with a regular source of income.
Beta: With a beta of around 0.5, SCHD is less volatile than the broader market.
Investing in SCHD stock offers a unique combination of income generation, portfolio diversification, and low costs. As one of the most popular dividend ETFs on the market, SCHD provides investors with a transparent and rules-based approach to selecting its holdings. Whether you're looking for regular income or a diversified portfolio, SCHD is an excellent option to consider.
Disclosure: This article is not intended as investment advice. It is recommended that investors consult with a financial advisor before making any investment decisions.
