SCHD ETF Holds Ground With 3.6% Yield as Dividend Investors Eye Stability Over Growth

SCHD ETF: Dividend Stability Meets Valuation Pressure as Investors Rebalance Toward Yield

The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) remains one of the most widely held income-focused ETFs in the market, continuing to attract long-term investors seeking quality dividends and conservative growth. Yet after a sluggish 2024 and a muted start to 2025, investors are beginning to reassess whether the fund’s value-heavy approach can keep pace with a market increasingly driven by technology and artificial intelligence.

SCHD, which tracks the Dow Jones U.S. Dividend 100 Index, holds a concentrated portfolio of high-quality, cash-generating companies with strong records of dividend sustainability. The fund has returned 8.4% year-to-date, lagging the S&P 500’s 14.7% gain, but outperforming broader dividend peers such as VYM (+6.3%) and DVY (+5.8%). With an expense ratio of just 0.06% and a trailing dividend yield of 3.6%, SCHD remains one of the most cost-efficient and income-reliable ETFs available to retail investors.

Financials, industrials, and healthcare continue to anchor the portfolio, with Broadcom (AVGO), Home Depot (HD), Texas Instruments (TXN), Pfizer (PFE), and PepsiCo (PEP) among its largest positions. Broadcom’s 2025 surge has provided a tailwind for SCHD, but weakness in traditional dividend sectors — particularly consumer staples and financials — has capped broader performance. Rising interest rates and slower global growth have weighed on companies like Amgen, IBM, and Cisco, which collectively make up nearly 12% of the fund.

The ETF’s resilience lies in its discipline. SCHD’s underlying methodology screens for companies with consistent dividend growth, strong return on equity, and sustainable payout ratios. That focus has helped it maintain a five-year dividend CAGR of 12.2%, with total distributions reaching $3.27 per share in 2024 and expected to exceed $3.45 in 2025, according to Schwab projections. The fund’s quarterly payouts — roughly $0.85 per share — continue to draw investors looking for income stability in a volatile equity environment.

Still, the fund faces growing competition from newer dividend strategies that integrate covered-call overlays or AI-sector exposure. Products like JEPQ and QYLD offer yields above 9% but sacrifice capital growth, while VIG, a rival focused on dividend achievers, has outperformed SCHD this year thanks to stronger exposure to tech and industrial innovation. The divergence highlights a broader market dynamic: investors remain split between traditional value-oriented income and growth-oriented yield enhancement.

From a valuation perspective, SCHD trades at an average price-to-earnings ratio of 16.9, compared with 21.8 for the S&P 500. That discount appeals to long-term investors seeking defensive positioning amid elevated equity valuations. However, the ETF’s muted exposure to the AI sector has limited upside during the current growth cycle. Technology accounts for just 13% of total holdings, compared with over 30% in the S&P 500.

Analysts at Morningstar recently reiterated a Gold rating for SCHD, emphasizing its consistency and investor-friendly structure. “SCHD offers a rare blend of quality, yield, and cost-efficiency that continues to outperform across full market cycles,” the firm wrote. Others remain cautious. Bank of America strategists warned that “dividend defensives could underperform in the next six months as investors chase growth leadership,” though they reaffirmed the fund’s long-term value for income portfolios.

Assets under management stand at $60.4 billion, up from $51 billion a year ago, reflecting strong investor loyalty despite short-term underperformance. Average daily volume remains above 3 million shares, making it one of the most liquid dividend ETFs on the market. The fund’s beta of 0.83 underscores its defensive nature, with lower volatility than most equity benchmarks.

Technically, SCHD has found consistent support near $76, where buyers have stepped in repeatedly over the past six months. Resistance sits near $81, with a confirmed breakout above that level likely to trigger renewed inflows. The 200-day moving average remains upward-sloping, signaling continued medium-term strength despite periodic consolidation.

Long-term investors continue to view SCHD as a cornerstone holding for dividend portfolios — a fund designed for compounding rather than trading. Its focus on profitability, free cash flow, and dividend reliability offers a measure of stability in an uncertain market. While its lack of exposure to AI and growth sectors has kept performance more measured than the broader market, SCHD’s low cost, dependable yield, and disciplined structure ensure it remains one of the most credible vehicles for investors seeking durable income and moderate appreciation.

For those prioritizing stability over speed, SCHD still represents what many call “the S&P 500 for dividend investors” — a patient, cash-flow-driven approach that continues to reward those willing to hold through cycles.

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