Consider the Schwab U.S. Dividend Stock ETF
From time to time, I find it worthwhile to highlight the Exchange Traded Fund (ETF). Just a reminder, ETFs trade similarly to stocks, and I’ve been particularly drawn to those that focus on high-dividend stocks. Among the various options, the Schwab US Dividend Stock ETF (NYSEMKT: SCHD) stands out for me.
Let me share why I favor it.
Attractive Income and Growth Potential
Generally, there’s a trade-off between dividend income and growth—high-yielding ETFs often grow at a slower pace. But the Schwab U.S. Dividend Stock ETF excels in both areas. As of June 3rd, the dividend yield is 3.25%. For comparison, check out the Vanguard S&P 500 ETF (NYSEMKT: VOO), which has a yield of only 1.1%.
| Fund | Average Annual Return (3 Years) | Average Annual Return (5 Years) | Average Annual Return (10 Years) |
|---|---|---|---|
| Schwab US Dividend Stock ETF | 15.09% | 8.50% | 12.78% |
| Vanguard S&P 500 ETF | 22.44% | 14.10% | 15.56% |
As of June 3, 2026, the data from Morningstar.com shows that while the Schwab fund is up 19% year-to-date, it still trails the S&P 500 in growth. However, it offers nearly three times the dividend income. Plus, the expense ratio is quite low at just 0.06%. If you put in $10,000, you’d only pay $6 in fees.
This ETF tracks the Dow Jones U.S. Dividend 100 Index, which consists of 100 stocks that have consistently paid dividends for at least a decade. The index also evaluates the financial health of companies, assessing metrics like total debt and cash flow to ensure stability. This focus on financial soundness could protect shareholders, as firms in trouble often cut or eliminate dividends.
Moreover, stable, high-dividend stocks usually increase their payouts over time, which is great news for investors.
Top Holdings in the Schwab U.S. Dividend Stock ETF
As of June 2, here are the top 10 holdings along with their weight in the fund and recent dividend yield:
| Stock | ETF Weight | Recent Yield |
|---|---|---|
| Qualcomm | 6.21% | 1.47% |
| Texas Instruments | 5.72% | 1.84% |
| United Health Group | 5.14% | 2.46% |
| Coca-Cola | 3.98% | 2.69% |
| Chevron | 3.95% | 3.75% |
| Merck | 3.78% | 2.96% |
| Verizon Communications | 3.68% | 6.07% |
| ConocoPhillips | 3.60% | 2.82% |
| Procter & Gamble | 3.50% | 3.04% |
| Amgen | 3.43% | 2.98% |
These ten stocks make up around 43% of the ETF’s total value. Notably, the fund holds about 18% in consumer defensive stocks, 15% in energy, and another 18% in healthcare. I find this distribution appealing, especially given the possibility of a market pullback in the upcoming years. If that occurs, these sectors are likely to hold their ground better than others.
For long-term investors seeking both growth and dividends, this ETF could be a great addition to your portfolio.
Should You Consider Buying Schwab U.S. Dividend Stock ETF Shares?
Before making any purchase decisions regarding the Schwab U.S. Dividend Stock ETF, there are a few things to keep in mind:
Our analysts at Motley Fool’s Stock Advisor have identified their picks for the 10 best stocks to invest in right now, and the Schwab U.S. Dividend Stock ETF isn’t among them. These selections are believed to have significant return potential in the coming years.
It’s also worth remembering past performance—like if you had invested in Netflix or Nvidia when they were first recommended, you’d have seen substantial growth on your investment.
Overall, the Stock Advisor’s average return has been impressive, far outpacing the S&P 500. It’s an encouraging sign for anyone part of that investment community.
