For income-focused investors, dividend stocks come highly recommended. A great way to invest in these is through dividend exchange-traded funds (ETFs). By utilizing dividend ETFs, you not only receive regular income but also enjoy the perks of diversification.
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Honestly, unless you’re putting your money into stocks like Nvidia—which is currently experiencing an impressive surge—it can be quite challenging to pinpoint stocks that promise long-term growth. And honestly, if you are after income, Nvidia’s meager $0.01 per quarter dividend likely won’t cut it.
Fortunately, the market offers several dividend ETFs, but in my view, the best option is the Schwab US Dividend Equity ETF (NYSEMKT: SCHD).
This ETF, managed by Charles Schwab Asset Management—one of the key players on Wall Street—tracks the Dow Jones US Dividend 100 Index. This index includes stocks known for their consistent dividend payments. The stocks within this fund are also screened to ensure they’re generally stronger than their peers.
SCHD is passively managed, with a low annual fee of $6 per $10,000, which is much lower than actively managed funds. It currently boasts total net assets of $71 billion.
The ETF’s leading holdings are in sectors that typically favor dividends, such as healthcare, consumer goods, industry, and energy.
| Top 10 Holdings | Portfolio Weight | Dividend Yield | Sector |
|---|---|---|---|
| AbbVie | 4.22% | 3.0% | Healthcare |
| ConocoPhillips | 4.10% | 3.3% | Energy |
| Chevron | 4.09% | 4.3% | Energy |
| Home Depot | 4.08% | 2.2% | Consumer Goods |
| Lockheed Martin | 4.08% | 2.7% | Industry |
| Cisco Systems | 4.04% | 2.4% | Technology |
| Verizon Communications | 4.01% | 6.4% | Communication Services |
| Amgen | 3.99% | 3.4% | Healthcare |
| Altria Group | 3.97% | 6.5% | Consumer Defense |
| Coca-Cola | 3.91% | 3.1% | Consumer Defense |
Data Source: Schwab Asset Management (as of September 25, 2025)
One crucial point about investing in dividend ETFs is that while your payment schedule remains consistent, the amount you receive may vary. These ETFs collect dividends from the stocks in their portfolio and distribute them to shareholders regularly, but distribution amounts can differ from quarter to quarter due to the varied schedules of the companies they hold.
The Schwab US Dividend Equity ETF is not only one of the largest in the dividend ETF category but also has a reputation for offering impressive yields. When compared to other funds, SCHD emerges as a standout option.
As previously noted, SCHD provides investors with both a solid yield and quality stocks. The Vanguard High Dividend Yield Index Fund ETF gives lower yields, and when you look at broader index funds, the Vanguard Value Index Fund ETF yields about 2.1%, while the Invesco QQQ Trust only offers around 0.5%. So, for income-focused investors, it’s quite obvious why Schwab ETFs are attractive.
However, a potential drawback of this ETF is its limited exposure to the technology sector. Tech has been a leading performer on Wall Street, and while this fund includes some noteworthy tech stocks, many top-performing tech companies do not provide dividends that fit into this ETF.
For those keen on dividend stocks, SCHD can certainly be a valuable part of a diversified portfolio. But if you’re aiming to capitalize on major trends like artificial intelligence, it could be wise to also invest in a selection of tech ETFs and leading tech stocks.
It’s certainly worth considering these factors before diving into investments with Schwab US Dividend Equity ETFs.
Motley Fool’s analysts have highlighted what they consider the 10 best stocks to buy right now, and interestingly, the Schwab US Dividend Equity ETF wasn’t included in that list. The stocks they recommend could potentially lead to significant returns in the next several years.
When should you pay attention? Take Netflix, for example. If you had invested $1,000 in it since the recommendation back on December 17, 2004, you’d have an impressive $652,872 now. Similarly, if you had put $1,000 into Nvidia based on the recommendation from April 15, 2005, you’d be looking at $1,092,280 today!
It’s also notable that the average return rate for Stock Advisor is a staggering 1,062%, significantly outperforming the 189% return of the S&P 500. So, make sure not to miss out on the latest Top 10 list when you join Stock Advisor.
*Stock Advisor returns are current as of September 22, 2025.
In summary, while there are solid dividend investments available, those interested in growth might want to look elsewhere as well, particularly in tech.
Disclosure: Some key positions include stocks from the Invesco QQQ Trust and Nvidia, along with AbbVie, Amgen, Chevron, Cisco Systems, and several Vanguard funds.
Why the Schwab U.S. Dividend Equity ETF Could Be a Top Choice for Dividend Investors in 2025
