If you’ve spent any time on YouTube or finance forums lately, you’ve probably seen people hyping the Schwab U.S. Dividend Equity ETF, better known as SCHD. It’s been dubbed everything from a standalone retirement strategy to a job replacement stock. As with all stocks, big claims like this need examining further.
SCHD Dividend ETF
SCHD is a dividend-focused ETF, and at around $25 a share, it’s one of the most accessible options on the market. That affordability seems to be a big part of its appeal on social media, where the low barrier to entry gets more people talking.
Growing Yield
The trailing 12-month yield is about 4.09%, which translates to roughly $1.04 per share in dividends. But what really caught my eye is the dividend growth. In 2020, the annual dividend was 68 cents; by 2024, it had grown to 99 cents. That’s a near 50% increase over just four years. SCHD is clearly engineered for payout growth, which makes it an interesting pick for income-focused investors.
The Holdings: A Tech Alternative
People often talk about SCHD as a solid alternative to the tech-heavy QQQ. SCHD’s top holdings include names like Coca-Cola, Lockheed Martin, and ConocoPhillips. Yes, there are tech names like Cisco and Texas Instruments, but it’s not dominated by the likes of Nvidia or Amazon. So if you’re looking for diversification away from the Magnificent 7, SCHD could be a smart play.
That said, when the big players like Nvidia crash, it’s rare for the rest of the market, including Coca-Cola, to walk away unscathed. SCHD isn't immune from broad market downturns.
The “Crash” Myth
I’ve seen headlines about SCHD “crashing” because it dropped from a December high of $28.95 to around $25 in April. Look, this is a dividend ETF, not a growth stock. It’s not supposed to skyrocket in price. If you're freaking out about a 10% dip, you might not fully understand what you’re investing in. SCHD’s goal is to steadily grow your income year after year.
Comparing SCHD to Other ETFs
To put SCHD into context, I compared it with a few other well-known funds: QQQ, the Dow, Vanguard Dividend Appreciation (VIG), and Vanguard High Dividend Yield (VYM).
3-Year Total Return:
- SCHD: 8.36%
- QQQ: 40%
- VIG: 22%
- VYM: 18%
- Dow: 20%
Year-to-Date (2025):
- SCHD: -6%
- QQQ: -8%
- VIG: -5.6%
- VYM: -4.67%
In these metrics, SCHD has underperformed compared to its dividend-focused peers like VIG and VYM. On a five-year timeline, it’s neck-and-neck with VYM, but significantly behind QQQ.
The Bottom Line
I don’t think SCHD is a bad investment, but let’s keep things in perspective. The hype sometimes oversells what this fund actually delivers.
And finally, a word of caution: jumping into dividend stocks every time the market gets shaky isn’t a strategy. If you panic-sell growth stocks, you risk missing the market’s best 10 days that often account for the bulk of yearly returns. Tom Lee from Fundstrat recently pointed out that missing those days turns an 8% average return into a -13% annual loss.