The Schwab U.S. Dividend Equity ETF Has Jumped 15% at the Beginning of 2026. Discover What’s Behind the Surge.

Schwab US Dividend Stock ETF Overview

The Schwab US Dividend Stock ETF (NYSEMKT: SCHD) stands out as one of the largest and well-regarded ETFs concentrating on dividend stocks. Currently, it boasts a solid income yield of around 3.5% based on the last year, along with impressive returns over time.

Last year, however, the fund’s performance was fairly lackluster, yielding only 0.4%. But things took a turn; by early 2026, it had dramatically surged close to 15%, surpassing the S&P 500’s increase, which this year hasn’t even reached 1%. It’s interesting to consider what fuels such performance.

Interestingly, the ETF tracks the Dow Jones US Dividend 100 Index, which includes top dividend-paying stocks. The selection strategy involves evaluating companies based on various criteria like dividend yield and the growth rate of dividends over the past five years.

This ETF offers fairly broad exposure to the market, but it does lean heavily toward energy sector investments, which made up about 19.9% of its holdings at the end of last year. The stakes there took a hit in 2025 when falling oil prices impacted overall earnings.

Now, the situation appears to be different in 2026. Oil prices have surged, with the global benchmark Brent crude climbing over 15% to more than $70 per barrel, largely due to potential supply issues linked to geopolitical tensions in Venezuela and Iran. The recent arrest of Venezuela’s former president on serious charges adds to the uncertainty, while tensions between the US and Iran grow.

The uptick in oil prices has turned out to be beneficial for the ETF since two of its key holdings are oil corporations. Chevron (NYSE: CVX) stands as the fourth-largest investment, making up 4.21% of the assets, while ConocoPhillips (NYSE: COP) is not far behind at 4.19%. Both companies have seen good performance this year, alongside others like S.L.B. (2.7% of the fund), EOG Resources (2.36%), and Valero Energy (2.19%).

It’s worth noting, though, that the ETF’s investment in these energy stocks isn’t merely due to the current oil rally but is instead based on their status as reliable dividend stocks. For instance, Chevron has recently boosted its dividend by 4%, marking a 39-year streak of growth. This oil giant has historically increased its dividends at a compound annual rate of around 6%, which is notable compared to the S&P 500’s growth rate of about 5%.

Similarly, ConocoPhillips is on a path of strong dividend growth as well, currently yielding 2.9% and recently raising dividends by 8%. Both companies are well-positioned to sustain their high-yield dividends, especially with projections for significant increases in free cash flow.

With so many high-dividend stocks within the oil sector, the Schwab US Dividend Stock ETF has a significant allocation there. It stands to benefit from rising oil prices, which could lead to more dividends from its energy investments. This might help secure strong returns for investors over the long haul.