The stock market, particularly the S&P 500, has experienced a 5.4% decline since the start of the year as of March 24. This dip in the index, which reflects the performance of 500 of America’s largest companies, suggests that many individual stock prices are also losing value. Interestingly, for high-dividend stocks, this decrease often results in a higher dividend yield.
Now, if you’re considering investing—whether it’s $10,000, or even $100—it’s worth evaluating which dividend stocks might be beneficial for your long-term portfolio. One option to look into is the Schwab U.S. Dividend Stock ETF (NYSEMKT: SCHD). This is an exchange-traded fund, meaning it operates like a stock while holding various dividend-paying companies.
So, why consider the Schwab U.S. Dividend Stock ETF? Well, it can provide both price appreciation and consistent dividend income. For context, the recent dividend yield for the S&P 500 was only 1.1%, whereas the Schwab ETF offered a much more attractive 3.3%. That’s quite a significant difference when you think about it.
| Period | Average Annual Profit |
|---|---|
| Past 3 years | 12.90% |
| Past 5 years | 8.92% |
| Past 10 years | 12.36% |
This ETF tracks healthy dividend payers and consists of around 100 companies. Below are the top 10 recent holdings:
| Stock | ETF Weight | Recent Yield |
|---|---|---|
| 1. Chevron | 4.58% | 5.31% |
| 2. ConocoPhillips | 4.20% | 2.60% |
| 3. Verizon Communications | 4.10% | 5.56% |
| 4. Merck | 3.99% | 2.92% |
| 5. Texas Instruments | 3.96% | 2.92% |
| 6. Coca-Cola | 3.94% | 2.76% |
| 7. UnitedHealth Group | 3.84% | 3.25% |
| 8. Abbott Laboratories | 3.79% | 2.42% |
| 9. PepsiCo | 3.79% | 3.78% |
| 10. Amgen | 3.79% | 2.89% |
This information suggests that by investing in this particular ETF, you could gain exposure to robust dividend-paying companies that are expected to grow over time. It provides a decent stream of passive income, which could be particularly useful during market downturns when most of these companies are likely to keep paying dividends.
However, before diving in and buying shares of the Schwab U.S. Dividend Stock ETF, there are a few considerations to keep in mind. Interestingly, while the Schwab ETF appears strong, some investment analysts have pointed out certain stocks that they believe could outperform it over the next few years. It’s always worth doing some research and weighing your options carefully.
