SCHD ETF at $31.62: Dividend Rotation Turns a 2025 Laggard into a 2026 Leader

NYSEARCA:SCHD – Dividend rotation turns a 2025 laggard into a 2026 leader

SCHD ETF – Price, yield and current positioning around $31.62

NYSEARCA:SCHD trades around $31.62, up about 1.0% on the day, after moving between $31.36 and $31.73 and sitting at the top of its 52-week range of $23.88 to $31.73. At this level SCHD carries roughly a 3.3% trailing yield on a declared dividend rate near $1.05 per share, with fund assets above $80 billion and an expense ratio of 0.06%. That combination – near 52-week highs, a mid-3% cash yield, and ultra-low costs – tells you one thing: the rotation that crushed SCHD ETF in 2024–2025 has flipped in its favor, and capital is paying up for a relatively high, repeatable cash stream.

SCHD ETF – From “horrific” underperformance to sharp outperformance

Through 2024 and especially 2025, SCHD ETF was exactly where you did not want to be: dividend value while mega-cap growth and AI-heavy names dominated. The fund lagged badly as the S&P 500’s performance became increasingly concentrated in a handful of high-multiple giants. The break with the index lined up with the AI boom; once that wave started, SCHD trailed because its methodology almost guarantees limited exposure to the hottest secular growth names. That same structure is now delivering the opposite effect. Since November 2025, as AI capex risk and stretched tech valuations started to bite, the relative performance flipped. The SCHD/SPY ratio turned decisively higher, and NYSEARCA:SCHD has delivered mid-teens total returns from early November while the cap-weighted S&P 500 has been roughly flat to slightly negative and QQQ has given back several percentage points.

SCHD ETF – Rotation out of mega-cap tech and into dividends

The key driver is not some sudden change in SCHD’s philosophy; it is capital rotation. A cluster of the largest S&P 500 names – NVDA, MSFT, META, TSLA, ORCL and others – are now 15–20% off their 52-week highs on average, while the overall index is only a few percent below its peak. That gap can only exist if money is leaving those top-heavy growth names and being recycled into the rest of the market. With bond PTSD still very real after the 2022 drawdown and inflation staying above pre-2020 norms, a lot of that cash is not going into BND-type products with a ~3.9% yield and limited real return; it is going into dividend vehicles. The ratio charts and return tables since early November show SCHD up more than 17% while SPY is flat, QQQ is down almost 5%, and high-yield dividend funds like IDV, SDY and SPYV are all beating the broad market in direct proportion to their payout levels. SCHD ETF sits directly in the cross-hairs of that substitution trade: decent starting yield, consistent growth, and equity-like upside if the rotation continues.

SCHD ETF – Sector tilt: defense, energy, communications and quality cyclicals

The way NYSEARCA:SCHD is built explains both the prior underperformance and the current surge. The ETF tracks the Dow Jones U.S. Dividend 100 Index, which screens for companies with at least 10 years of dividend payments, strong cash-flow coverage, and attractive yields. As of the latest holdings snapshot, there are 103 positions, but roughly 41.5% of assets sit in the top ten. Within that top slice, five names dominate: Lockheed Martin, Texas Instruments, Chevron, ConocoPhillips, and Verizon collectively account for more than 22% of fund assets. Four of those are defense, energy, and telecom – sectors that were dead money while momentum chased AI, but are now exactly where capital is rotating. Texas Instruments is the exception: a semiconductor name that actually benefited from the hardware build-out but trades on a much more mature, cash-rich profile than the hyperscalers. The rest of the top ten is dominated by pharma, retail and consumer staples, all of which have posted strong year-to-date price gains in the high-single to mid-teens range. Even the “laggard” among them, Coca-Cola, has gained close to 10% over the recent window. When you combine that performance profile with the fact that energy, consumer and healthcare now make up more than half of the portfolio by sector weight, it is not surprising that SCHD ETF is suddenly “doing the unthinkable” and beating growth.

SCHD ETF – 2025 reconstitution damage, 2026 reconstitution tailwind

Annual reconstitution is a double-edged weapon for SCHD ETF. In 2025 the rebalance timing was poor: some energy additions came into a soft patch for crude, and prior winners that would have kept boosting returns were dropped as they no longer met the index rules. That reconstitution cemented underperformance just as the AI melt-up accelerated. Fast-forward to early 2026 and the same mechanical process is working the other way. The current basket is overweight exactly those sectors – energy, old-economy industrial names, defensive cash machines – that are being bid up as the market questions whether AI capex and depreciation can sustain the previous earnings trajectory for the Magnificent 7. The upcoming 2026 reconstitution will again create risk: stocks that still have upside could be forced out, and new names may arrive just as their sectors cool. But that is the structural deal with NYSEARCA:SCHD; you are buying a rules-based dividend engine that will occasionally look brilliant and occasionally look out of sync depending on where the cycle is.

SCHD ETF – “Great substitution” effect versus bonds and other dividend ETFs

The second article’s framing around a “great substitution” is accurate and directly relevant to SCHD ETF. The bond market’s multi-year drawdown left a scar. With CPI still running above the pre-2020 trend and fiscal deficits entrenched, locking into a fixed coupon around 3.8–4.0% in something like BND offers minimal real return and meaningful duration risk if inflation re-accelerates. The response has been clear: capital is migrating toward equities that behave like bond proxies. When you compare returns since early November 2025, SCHD, IDV, SDY, DGRO and SPYV all beat SPY, and the ranking lines up closely with yield levels. SCHD shows about 17.5% total return over that span with a 30-day SEC yield around 3.5% and three-year dividend growth of just over 7%. DGRO, with a lower yield near 2.1% but strong dividend growth around 7.5%, lags SCHD but still outperforms SPY. RSP, the equal-weight S&P 500 ETF, is up roughly 6.5% with a 1.6% yield as breadth improves. SPY is flat. QQQ is down nearly 5%. That return stack tells you how markets are repricing cash flows: stable and growing distributions at 3–4% are suddenly preferred over low-coupon bonds and non-paying growth stories, and SCHD ETF is a primary beneficiary.

SCHD ETF – Price behavior, total return record and where the risk sits now

Looking longer than a few months, the picture is more nuanced. From launch through the pre-AI era, NYSEARCA:SCHD largely kept pace with, and occasionally outperformed, the S&P 500 on a total-return basis once dividends are reinvested. The break in performance really began when a handful of tech and communication names pulled the index to new highs in 2024–2025 while dividend payers stagnated. That gap now looks like classic style drift: one side of the market over-earning, the other ignored. The last six weeks show how quickly that can reverse. At roughly $31.62, with a 52-week low under $24, current holders are sitting on ~30% upside from the trough and mid-teens gains just from the rotation that started in November. The risk from here is straightforward. If AI-linked growth regains the narrative and yields back up aggressively, value and dividend funds like SCHD ETF can underperform again. A sharp fall in inflation expectations or a renewed bond rally could also siphon off some of the cash currently using dividend ETFs as bond replacements. Finally, the reconstitution can inject single-stock risk if the new crop of constituents is late-cycle or added right before a sector reversal.

SCHD ETF – Relative position versus DGRO, RSP and other options

Within the dividend and factor ETF universe, SCHD ETF is not the only way to express this theme. DGRO offers a slightly lower yield but cleaner sector balance and stronger dividend growth. RSP is the purest way to capture the breadth rotation: every S&P 500 component at roughly 0.2% weight, with a modest yield and near-7% dividend growth as well. IDV gives higher income above 4% but with weaker dividend growth and more international and sector-specific risk. The performance table since early November shows SCHD at the top of the pack among U.S. dividend strategies, but that outperformance is partly the result of its specific sector tilts toward staples, energy and industrial/defense. Anyone using NYSEARCA:SCHD needs to recognize that this is not a neutral market proxy; it is a targeted bet that the current preference for “old economy” cash-rich names over long-duration growth and over bonds continues. If that thesis holds, SCHD should keep outpacing SPY and QQQ. If the market swings back to aggressive growth and bond yields collapse, DGRO or RSP likely offer smoother relative performance.

SCHD ETF – Forward view, rate backdrop and distribution profile

With SCHD’s yield around 3.3–3.5% and three-year distribution growth running roughly 7% annually, the forward income profile is attractive in a world where cash and short-term bills are likely to see falling rates. As central bank policy gradually moves away from the peak-rate regime of 2023–2024, the real yield gap between dividend equities and risk-free instruments narrows in nominal terms but widens in growth terms, because companies in SCHD ETF continue to raise payouts while a bond’s coupon does not. If inflation stabilizes in the 2.5–3.0% band and nominal GDP growth stays positive, a 3.5% starting yield with mid-single to high-single digit payout growth can deliver high-single digit to low-double digit total returns over time, even without multiple expansion. The flip side: if inflation re-accelerates sharply or a recession forces widespread dividend cuts across consumer, industrial and financial names, that thesis breaks. Given the quality screens in SCHD’s index and the diversified 103-stock portfolio, broad-based dividend collapse is a low-probability scenario; idiosyncratic cuts will happen, but the basket should absorb them.

SCHD ETF – Verdict: BUY, with a bullish tilt as long as the rotation holds

Taking all of this together – price at $31.62 near all-time highs, a 3.3%+ yield, long-term dividend growth around 7%, clear evidence of capital rotating from mega-cap growth into value and income, and a structural substitution away from bonds – NYSEARCA:SCHD screens as a Buy with a constructive, bullish stance. The call is not that SCHD will “crush” everything in every scenario; the call is that, in the current regime where AI capex risk, inflation memory and bond aversion dominate, the fund is positioned on the right side of the flows. The main risks are a sharp re-acceleration in growth-stock leadership, an aggressive bond rally that pulls yield-seekers back into fixed income, or a poorly timed 2026 reconstitution that dilutes the current sector mix. Even with those caveats, the risk-reward around today’s price favors maintaining or adding exposure for anyone building a diversified, dividend-centric allocation.

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