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Schwab U.S. Dividend Equity ETF

SCHD:NYSE

equity ETF | passive | Charles Schwab | Tracks Dow Jones

Market Price

US$29.18 (26 Jan 2026)

+4.33% (YoY)

NAV

US$29.13

+0.17% Premium

Yield

3.82%

-6.59% (YoY)

Expense Ratio

0.06%

-87% vs Avg: 0.47%

Box Set (ETF)

⚡ Executive Summary

📊 The Bottom Line

This ETF invests in high dividend-yielding U.S. stocks selected for fundamental strength, aiming for consistent income and capital appreciation. With a strong track record and low fees, it's a solid choice for core portfolio equity exposure. Bull case projects NAV reaching US$33.50 (+15%) while bear case suggests US$24.75 (-15%) over 12-18 months.

⚖️ Risk vs Reward

The ETF's underlying holdings trade at a P/E of 17.06x, positioning it as a value-oriented exposure compared to the broader market. While dividend-paying stocks can offer stability, they may underperform during periods of aggressive growth stock outperformance. The current 3.82% dividend yield provides an attractive income component, but the ETF is sensitive to interest rate changes, which could impact the relative attractiveness of its dividends. Its defensive qualities could offer downside protection in volatile markets.

🚀 Why SCHD Could Soar

• Sustained investor rotation towards value and income-generating assets could drive multiple expansion for SCHD's underlying holdings, potentially adding 10-15% to its NAV.
• Continued robust dividend growth from its fundamentally strong constituents could significantly boost total returns and attract further income-focused capital.
• Outperformance during periods of market volatility, due to its defensive, quality-screened portfolio, could lead to relative gains even in challenging environments.

⚠️ What Could Go Wrong

• Rapid increases in interest rates could diminish the relative appeal of dividend yields, putting downward pressure on equity valuations within the ETF, potentially leading to a 10-15% decline in NAV.
• A prolonged economic slowdown or recession might lead to cuts in corporate earnings and dividends among some holdings, impacting the fund's income and causing a 15-20% NAV depreciation.
• Concentration in certain sectors like Energy and Healthcare means underperformance in these areas could disproportionately affect overall ETF returns, resulting in a 5-10% NAV drop.

🏢 Fund Overview

What Are You Actually Buying

This ETF provides exposure to U.S. companies that have a consistent history of paying dividends, focusing on high dividend yields and fundamental strength relative to their peers.
The fund invests primarily in large-cap, value-oriented companies chosen based on financial ratios like cash flow to total debt, return on equity, dividend yield, and 5-year dividend growth rate, aiming for sustainable dividends.
These companies typically reside in more stable industries and are often considered some of the safest firms in the market, contributing to portfolio stability and income generation.

Market Dynamics & Outlook

Dividend stocks are increasingly sought after for income in uncertain economic environments, but their performance can be sensitive to changes in interest rates and market sentiment towards growth equities.
The current market exhibits a dynamic tension between growth-oriented sectors and value/income plays, with ongoing debates about inflation, interest rates, and economic expansion impacting sector leadership.
SCHD's focus on quality metrics and sustainable dividends aims to navigate these dynamics by selecting companies with robust financial health, potentially offering resilience.

🎯 Why This Matters

Understanding this market is crucial as it represents a strategic approach to equity investing that prioritizes both income and quality. In a fluctuating economic climate, the selection methodology of this ETF aims to provide a reliable source of dividends and potential capital appreciation from established, financially sound U.S. companies.

📈 Valuation & Analysis

Historical Performance

YTD

+4.45%

Yearly Growth (3Y)

+6.83%

Yearly Growth (5Y)

+8.89%

Yearly Growth (10Y)

+11.54%

Yearly Growth (Since Inception)

+12.30%

Current Valuation

The ETF's underlying holdings, as of December 31, 2025, trade at a weighted average price-to-earnings (P/E) ratio of 17.06x, which is below the trailing P/E of the broader market (18.03x for S&P 500, Yahoo Finance data). This indicates a value-oriented bias in the portfolio. The price-to-book (P/B) ratio stands at 2.92, suggesting a reasonable valuation for companies selected based on fundamental strength. The current dividend yield of 3.82% is attractive, aligning with the fund's objective to provide exposure to high dividend-paying U.S. equities.

The Bull Case - Upside to

Continued Shift to Value and Income

Medium Probability

If market conditions favor value and income-generating equities, SCHD's quality dividend stocks could see increased demand, leading to a 10-15% NAV appreciation over the next 12-18 months.

Sustainable Dividend Growth by Holdings

High Probability

The fund's focus on companies with a history of increasing dividends, coupled with robust corporate earnings, could drive average dividend growth of 5-7% annually, significantly enhancing total returns and attracting more capital, potentially adding 5-8% to NAV.

Defensive Characteristics in Market Downturns

Probability

In periods of heightened market uncertainty or correction, SCHD's portfolio of stable, fundamentally strong companies could exhibit superior downside protection and relative outperformance, limiting losses to 5% while the broader market declines by 10-15%.

The Bear Case - Downside to

Rising Interest Rates Dampen Dividend Appeal

Medium Probability

A continued sharp rise in interest rates could make fixed-income alternatives more attractive, reducing investor appetite for dividend equities and potentially leading to a 10-15% decline in SCHD's NAV as yields become less competitive.

Economic Slowdown Impacts Corporate Fundamentals

Low Probability

A deeper-than-expected economic slowdown or recession could result in reduced corporate earnings and potential dividend cuts among some of SCHD's holdings, negatively affecting the fund's income stream and leading to a 15-20% NAV depreciation.

Sector Concentration Risk

Probability

With significant exposure to sectors like Energy (14.73%) and Healthcare (15.5%), adverse developments or underperformance within these key sectors could disproportionately impact the ETF's overall return, causing a 5-10% NAV decline.

Risk/Reward Assessment

The Schwab U.S. Dividend Equity ETF presents a balanced risk-reward profile, attractive to investors seeking a blend of income and growth with a focus on quality. On the upside, the ETF is well-positioned to benefit from a sustained shift towards value stocks and continued dividend growth from its high-quality underlying holdings. Its disciplined screening methodology aims to filter for financially healthy companies capable of maintaining and growing their dividends, offering a compelling total return proposition, especially in a more measured economic growth environment. However, significant risks persist, primarily from the potential impact of rapidly rising interest rates, which could diminish the relative attractiveness of equity dividends compared to fixed-income investments. Additionally, an unexpected severe economic downturn could challenge the dividend sustainability of some companies, impacting the fund's income and capital value. While the portfolio is diversified, its notable allocations to specific sectors also present a degree of concentration risk. For long-term investors, the fund's strategy offers a potentially more defensive posture than broader market indexes, with a reasonable upside tied to fundamental corporate strength and income generation, balanced against market-wide and sector-specific headwinds.

Peer Comparison

• SCHD offers a highly competitive expense ratio of 0.06%, matching VYM and significantly lower than many other dividend ETFs, resulting in greater long-term cost efficiency. • The fund's robust screening methodology, focusing on quality and sustainability of dividends, aims to select companies with strong financials, which may contribute to more consistent performance. • With US$76.57 billion in AUM, SCHD provides excellent liquidity and narrow bid-ask spreads, making it efficient for investors to trade. • While its TTM yield of 3.82% is competitive, some peers may offer slightly higher yields, though potentially with different underlying quality screens or risk profiles.

Fund	Expense Ratio	AUM (B)	1Y Return	3Y Return	5Y Return	Yield
Schwab U.S. Dividend Equity ETF (SCHD) ⭐	6.00%	US$76.6B	4.45%	6.83%	8.89%	3.82%
Vanguard High Dividend Yield ETF (VYM)	6.00%	US$84.5B	15.42%	13.09%	12.67%	2.45%
Vanguard Dividend Appreciation ETF (VIG)	5.00%	US$120.0B	14.16%	15.21%	11.26%	1.58%
iShares Core High Dividend ETF (HDV)	8.00%	US$12.5B	11.92%	9.14%	10.70%	3.04%

🎯 Why This Matters

The detailed valuation and peer comparison highlight SCHD's position as a low-cost, quality-focused dividend ETF. Investors should consider its balance between income generation and capital appreciation potential, weighing it against the specific strategies and performance characteristics of its closest competitors to align with their investment objectives.

📊 Appendix

Top 10 Holdings (80+ of ETF Value)

#	Ticker	Logo	Name	Sector	Weight
1	LMT	L	Lockheed Martin Corp	Industrials	0.0%
2	CVX	C	Chevron Corp	Energy	0.0%
3	BMY	B	Bristol-Myers Squibb Co	Healthcare	0.0%
4	TXN	T	Texas Instruments Inc	Technology	0.0%
5	MRK	M	Merck & Co Inc	Healthcare	0.0%
6	HD	T	The Home Depot Inc	Consumer Cyclical	0.0%
7	COP	C	ConocoPhillips	Energy	0.0%
8	MO	A	Altria Group Inc	Consumer Defensive	0.0%
9	KO	C	Coca-Cola Co	Consumer Defensive	0.0%
10	AMGN	A	Amgen Inc	Healthcare	0.0%

Fund Mechanics

How It Works

The Schwab U.S. Dividend Equity ETF (SCHD) is a passively managed exchange-traded fund that seeks to track the performance of the Dow Jones U.S. Dividend 100 Index. This index is designed to measure the performance of high dividend-yielding stocks issued by U.S. companies that demonstrate a consistent record of paying dividends. The index methodology incorporates fundamental screens based on financial ratios such as cash flow to total debt, return on equity, dividend yield, and 5-year dividend growth rate to select companies with sustainable dividends and overall financial strength. The fund invests at least 90% of its net assets in these index-included stocks. It utilizes a modified market capitalization weighting approach, with individual securities capped at 4% and sectors at 25% of the index at the time of construction, reconstitution, and rebalancing to ensure diversification. The overall composition is reviewed annually, while the portfolio is rebalanced quarterly, which contributes to its turnover rate.

Holdings Breakdown

Number of Holdings

102

Top 10 Concentration

4059.0%

Turnover Rate

2851%

Category	Weight	Description
Healthcare	15.5%
Consumer Defensive	15.1%
Energy	14.7%
Technology	14.0%
Financials	9.5%
Industrials	10.0%
Consumer Cyclical	11.2%
Basic Materials	4.0%
Communication Services	3.7%
Utilities	0.1%
Other	0.1%

Cost Efficiency

Expense Ratio

0.06%

Median Bid-Ask Spread

0.040%

Expense Ratio History

Year	Expense Ratio
2025	0.06%
2024	0.06%
2023	0.06%
2022	0.06%
2021	0.06%

Performance History

Year	ETF Return	Benchmark Return	Tracking Diff	Volatility	Max Drawdown	Sharpe Ratio
2025	4.45%	18.83%	N/A	N/A	N/A	N/A
2024	11.60%	17.16%	N/A	N/A	N/A	N/A
2023	4.58%	14.35%	N/A	N/A	N/A	N/A
2022	-3.23%	-6.93%	N/A	N/A	N/A	N/A
2021	29.78%	26.47%	N/A	N/A	N/A	N/A
2020	15.11%	5.43%	N/A	N/A	N/A	N/A
2019	27.28%	28.27%	N/A	N/A	N/A	N/A
2018	-5.46%	-7.52%	N/A	N/A	N/A	N/A
2017	20.88%	17.14%	N/A	N/A	N/A	N/A
2016	16.25%	18.31%	N/A	N/A	N/A	N/A

Annualized Return Since Inception

12.30%

Detailed Peer Comparison

Ticker	Name	Issuer	Exp Ratio	AUM (B)	1Y	3Y	5Y	Yield	StdDev 3Y	Sharpe 3Y	Spread
SCHD ⭐	Schwab U.S. Dividend Equity ETF	Charles Schwab	6.00%	US$76.6B	4.5%	6.8%	8.9%	3.82%	12.61%	0.50	0.040%
VYM	Vanguard High Dividend Yield ETF	Vanguard	6.00%	US$84.5B	15.4%	13.1%	12.7%	2.45%	N/A	N/A	0.010%
VIG	Vanguard Dividend Appreciation ETF	Vanguard	5.00%	US$120.0B	14.2%	15.2%	11.3%	1.58%	8.50%	0.82	0.010%
HDV	iShares Core High Dividend ETF	iShares	8.00%	US$12.5B	11.9%	9.1%	10.7%	3.04%	N/A	N/A	N/A
Category Average			0.47%	—	13.2%	13.1%	6.7%	0.02%	—	0.60	—

Risk Metrics

Beta

0.75

Alpha

-0.03

R-Squared

0.06

Standard Deviation

1 Year	3 Years	5 Years	10 Years
11.45%	12.61%	14.59%	N/A

Sharpe Ratio

1Y	3Y	5Y	10Y
0.49	0.50	0.66	0.76

Sortino Ratio

3 Years	5 Years
N/A	N/A

Maximum Drawdown

1 Year	3 Years	5 Years	Since Inception
N/A	N/A	N/A	-21.54%

Correlations

Liquidity & Trading

Volume

Avg Daily Shares

18,628,193

Avg Daily Dollar Volume

US$0.0M

Trend

stable

Bid-Ask Spread

Metric	Value
Median (Percent)	0.040%
Median (Dollar)	N/A
During Hours	N/A
At Close	N/A
Volatility	low

Premium/Discount to NAV

Metric	Value
Current	0.02%
30-Day Average	0.02%
1-Year Average	0.02%
Standard Deviation	N/A
Max Premium (1Y)	0.14%
Max Discount (1Y)	-0.14%

Creation/Redemption Activity

Trend

increasing

Net Flows

Period	Net Flow
1 Year	US$0.0M

⚠️ Disclaimer: This ETF research report is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell securities. EC² Invest is not a registered investment advisor. All data is sourced from public sources and may contain errors. Past performance does not guarantee future results. ETF investing involves risk, including possible loss of principal. Always conduct your own research and consult with a qualified financial professional before making investment decisions.