SCHD ETF Price Holds Around $31.50 as 2026 Rebalance Targets Higher-Quality Yield

SCHD ETF (NYSEARCA:SCHD) Dividend Engine Repricing Around $31.50

Price snapshot and yield profile of SCHD ETF

SCHD ETF (NYSEARCA:SCHD) trades around $31.50, slightly below the prior close of $31.64, inside a tight daily range of roughly $31.29–$31.66, and just under its $31.87 52-week high versus a $23.88 low. At this level, the fund distributes about $1.05 per share annually, translating into a cash yield of roughly 3.31–3.33%, while charging a minimal 0.06% expense ratio on about $85.2 billion in assets. After three difficult factor years, the unit price is already up roughly 15% in 2026, yet the yield still sits above its own ten-year average near 3.23%, signalling that the re-rating is incomplete and the market is not fully pricing the income and quality profile.

How SCHD ETF builds a concentrated high-quality dividend universe

SCHD ETF tracks the Dow Jones U.S. Dividend 100 framework, but the real edge is how strict the inclusion rules are. Only companies with at least 10 consecutive years of dividend payments, float-adjusted market cap above $500 million, and three-month average dollar volume above $2 million even qualify for scoring. From there, candidates are ranked on four hard metrics: free-cash-flow-to-debt, return on equity, indicated yield, and five-year dividend growth. The top 100 names by composite score form the portfolio, with no stock allowed to exceed 4% of assets and any single sector capped at 25%, rebalanced quarterly and fully reconstituted once a year. This gives SCHD ETF a portfolio-level ROE near 27.8% versus roughly 18.4% for the S&P 500, a yield of about 3.33% against the S&P’s roughly 1.4%, and a valuation near 17.1x earnings versus about 29.4x on the broad index.

Sector tilts, concentration and why SCHD ETF looks nothing like vanilla value

Because the rule set is yield- and fundamentals-driven, SCHD ETF ends up structurally different from standard value benchmarks. Energy sits around 19.9–21.0% of assets depending on timing of the last disclosure, at one point roughly 1,400 basis points above its weight in Russell 1000 Value. Healthcare is about 16.2%, and financials roughly 9.7%, while the top ten holdings account for roughly 42% of the fund. Overlap with the Russell value complex is only about 10% by weight and just 7% versus broad Russell 1000 exposure. That means return paths will deviate sharply; SCHD ETF will look either very right or very wrong versus headline indices in any given year, but that is exactly how it has been able to deliver more than 100 bps of annualised outperformance versus value peers since inception, with a lower drawdown profile.

2025 energy overweight and the setup heading into the 2026 reconstitution

The March 2025 reconstitution pushed SCHD ETF heavily into energy. The model added five energy holdings, resulting in a net 8.8 percentage-point increase in sector exposure and leaving energy near 21.0% immediately after the rebalance, while trimming a net four consumer discretionary and four financial names. Subsequent underperformance in oil and gas pulled that weight back toward 19.9%, but energy remains the dominant sleeve. This shift hurt relative performance between 2023 and 2025, when non-dividend payers and high-growth tech led markets, but it positioned the fund strongly for the current rotation into real assets and cash-generating cyclicals.

Projected 2026 SCHD ETF rebalance: from stretched energy toward financials and healthcare

Simulations that replicate the SCHD ETF rulebook point to a cleaner portfolio after the March 2026 reconstitution. On the reduction side, positions such as COP, HAL, VLO and CSCO screen weaker on the key metrics. COP and CSCO show relatively high debt-to-cash-flow ratios and slower recent dividend growth, with COP also facing a setback in ROE. HAL and VLO now yield below the fund’s 3.33% average, with VLO also showing pressured five-year dividend growth and a poorer debt-to-free-cash-flow profile. Cutting or trimming these names would pull the roughly 19.9% energy allocation down and release capital to higher-scoring sectors without compromising the overall income level.

Healthcare as a structural growth and income driver inside SCHD ETF

Within healthcare, SCHD ETF already owns names such as ABBV and MRK that sit comfortably inside the fund’s sweet spot. ABBV yields around 2.99%, MRK about 2.80%, both close to the 3.33% fund average, with robust five-year dividend growth, ROE above the roughly 27.7% portfolio mean (with ABBV adjusted for extraordinary items), and manageable leverage versus free cash flow. Additional increases in names like JNJ and other high-quality healthcare payers look justified. Sector-wide, healthcare has delivered roughly 7.95% five-year dividend CAGR, outpacing energy, staples, financials and utilities, aligning perfectly with SCHD ETF’s mandate of combining higher current yield with sustainable growth rather than pure yield chasing.

Financials upgrade: why BX and PGR fit the SCHD ETF rulebook

On the financial side, candidates such as BX and PGR match the SCHD ETF scoring model almost line by line. They exhibit strong free-cash-flow-to-debt ratios, high and stable ROE, competitive yields, and solid five-year dividend growth. Increasing financials from roughly 9.7% to a higher share after the 2026 rebalance would align with sector dashboards that currently show financials near the top on combined value and growth scores, with healthcare close behind. This shift would reduce reliance on energy’s more volatile growth profile while preserving the value tilt, improving the long-term balance between payout stability and capital appreciation.

Dividend growth track record, capital recycling and current valuation of SCHD ETF

From a cash-flow perspective, SCHD ETF has delivered around 10.6% annualised dividend per share growth over the last decade while keeping the headline yield in the 3.3–3.5% band. That outcome is not accidental; the annual reconstitution systematically recycles capital out of fully re-rated, lower-yield names into higher-yielding stocks that still clear strict filters on ROE, free cash flow and distribution growth. At a unit price of $31.50 and payout of about $1.04–1.05, the trailing yield around 3.31–3.33% remains above the roughly 3.23% ten-year average, while the portfolio trades near 17.1x earnings versus about 29.4x for the S&P. If dividends continue to grow in the high single- to low double-digit range, the forward yield on cost for an entry around $31–32 moves toward 3.6–3.8% without requiring any further multiple expansion.

Risk profile: factor cyclicality and structural exclusions in SCHD ETF

The structure of SCHD ETF brings clear risks alongside its advantages. A roughly 20% energy weight, a 42% top-ten concentration, and only 7–10% overlap with major benchmarks mean that periods of underperformance versus headline indices are inevitable. A renewed downturn in energy or an unexpected shock in financials right after the allocation increases would put short-term pressure on the $31.50 price area. The methodology also excludes REITs and newer high-growth names with less than 10 years of dividend history, guaranteeing that the fund lags in phases dominated by non-payers and early-stage growth stories. Finally, the rule set will, by design, cut popular holdings once their yield, ROE or dividend growth fall below thresholds, which can cause tracking error relative to discretionary dividend portfolios that keep legacy positions for emotional or narrative reasons.

Verdict on SCHD ETF (NYSEARCA:SCHD): stance at $31–32

With SCHD ETF (NYSEARCA:SCHD) trading around $31.50, yielding roughly 3.31–3.33%, supported by a portfolio ROE near 27.8%, earnings growth around 9.3%, a 17.1x earnings multiple versus a roughly 29.4x market, and a ten-year dividend CAGR near 10.6%, the setup remains attractive despite the roughly 15% gain booked in 2026 so far. The likely March 2026 rebalance away from a 19.9% energy overweight and toward stronger financial and healthcare franchises improves the growth and quality mix without sacrificing income. The position is not a bargain basement entry after the recent move, and it requires tolerance for factor cycles and style-driven underperformance, but on a multi-year horizon the risk-reward at $31–32 justifies a clear Buy call with a bullish bias on both income growth and total return.

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