SCHD Explained - ETF investing in the dividend stocks in the US market

This post introduces ETF SCHD with the information such as holdings, history, price, dividend rate and more. If you are looking for investment products to buy US dividend stocks, today's post will help you learn about this particular dividend ETF. 

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SCHD Overview

US stock investors are historically keen about dividend from their investment. Warren Buffet said he is not interested in investing in gold because it does not pay out dividend. When the price of stocks is not growing or even declining, dividend from the stocks will help the investor sleep better at night. The love for fat and stable dividend led to creation of ETFs putting money into companies paying good dividend.

SCHD is created and launched by Charles Schwab in October 2011. It collects fee about 0.06%. AUM of ETF is currently $347.6B. Competing ETFs are HDV, FDL, RDIV, WBIY and GBDV. The current price of the product is $79.46. 

 

SCHD Holdings and Dividend Rate

This can be easily the information most investors are eager to find out.  SCHD ETF selects its holdings with the standards of debt ratio against cash flow, ROE, dividend rate and dividend growth. The ETF buys stocks of the companies which have been paying dividend for more than 10 years. Since SCHD holds stocks of companies paying dividend in a sustainable manner, stocks tend to be large-cap companies. And REITs are excluded. Each holding is capped at 4%, while sectors can be 25% tops. The ETF rebalances its holdings every quarter and reviews its composition every year. 

 

The holdings include:

• Pepsi
• Merck
• Broadcom
• Coca-Cola
• Texas Instrument
• Amgen
• Pfizer
• Cisco Systems
• Verizon Communications
• IBM

The top 10 holdings account for almost 40% of the total composition. 

The dividend rate is 2.86% as of 2021. Dividend is paid quarterly. 

 

Conclusion

A smart investor will not miss out on the joy of getting nice dividend. That is why many investors make sure his/her portfolio has dividend stocks. But if you have a trouble picking up quality stocks yourself, betting on the dividend ETFs like SCHD can be a fine alternative. SCHD ETFs have shares of US companies with good dividend pay history.  Large-cap companies with awesome payout sounds sweet and all, but a wise investor will not forget sometimes the dividend stocks price stops growing, or even going south for a longer term. Meaning there is good chance you will not be able to sell those stocks above the price you paid for.