-Historical performance of SCHD – Over 207.54% growth since inception (Source: Google Finance)
“Consistency is the most powerful force in compounding.”
Among U.S. dividend ETFs, SCHD continues to dominate in popularity.
It offers more than just a high yield — with a high-quality portfolio, systematic rebalancing, and strong long-term performance, SCHD stands out as a balanced and reliable option.
In this post, we’ll cover everything you need to know about SCHD in 2025.
1. ETF Overview
- Name: Schwab U.S. Dividend Equity ETF (SCHD)
- Issuer: Charles Schwab
- Inception Date: October 20, 2011
- Underlying Index: Dow Jones U.S. Dividend 100 Index
- Expense Ratio: 0.06%
- Dividend Frequency: Quarterly (March, June, September, December)
- Dividend Yield: ~3.5% to 4.2%
- Current Price: ~$26.11 (as of May 2025)
- Average Daily Volume: Over 3 million shares
What is the Dow Jones U.S. Dividend 100 Index?
The Dow Jones U.S. Dividend 100 Index is a rules-based equity index that tracks the performance of 100 high-quality U.S. companies with a consistent history of dividend payments.
2. Strengths
✅ Balanced Between Yield and Growth
SCHD delivers more than just dividends. With an average annual return of over 11% over the last decade, it’s proven itself as a strong core holding for long-term investors.
✅ Strong Dividend Growth
Not only does SCHD offer a solid yield, but its dividends also grow consistently year over year — averaging around 12% annual growth over the past five years.
✅ Excellent Risk-Adjusted Returns
With lower volatility than the broader market and limited sector concentration, SCHD offers steady performance even during downturns.
✅ Automatic Rebalancing
Each year, SCHD adjusts its holdings based on clear quality metrics — no micromanaging needed for long-term holders.
✅ Exposure to USD Assets
As a dollar-denominated ETF, SCHD can also serve as a partial hedge or diversification from local currency risk.
3. Weaknesses
⚠️ Low Tech Exposure Can Limit Upside in Growth Markets
In 2023–2024, mega-cap tech stocks (e.g., Nvidia, Microsoft, Meta) led the market. SCHD, with limited tech allocation, missed out on much of that upside.
⚠️ No Small-Cap or High-Growth Stocks
SCHD focuses on large-cap value names. Those seeking explosive growth might find this ETF too conservative.
⚠️ Excludes REITs and MLPs
Even high-yield stocks will be excluded if they don’t meet SCHD’s strict quality criteria. REITs, for example, are not included.
⚠️ 15% U.S. Withholding Tax on Dividends
Dividends from SCHD are subject to a 15% withholding tax for non-U.S. investors, which cannot be reclaimed in most cases.
📊 SCHD Annual Dividend per Share (2020–2024)
| Year | Annual Dividend |
|---|---|
| 2020 | $2.02 |
| 2021 | $2.25 |
| 2022 | $2.56 |
| 2023 | $2.78 |
| 2024 | $2.94 |
Source: Schwab Asset Management – SCHD Distributions
4. Dividend Growth
5-Year Average Dividend Growth: ~12%
From 2020’s $2.02 to 2024’s $2.94 — a total increase of ~45%.
SCHD is one of the few ETFs that have consistently raised dividends every year, making it a strong pick for income compounding.
→ What matters more than a high starting yield is a growing income stream over time — and SCHD delivers that.
5. Historical Performance (Annualized Returns)
- 1-Year Return (2024): +2.7%
SCHD underperformed during the AI-led tech rally due to its lower tech allocation. - 5-Year Annualized Return: +9.6%
- 10-Year Annualized Return: +11.5%
📌 Not the flashiest in the short term — but a model of consistency over the long run.
6.📊 SCHD Sector Allocation (as of March 31, 2025)
| Sector | Weight (%) |
|---|---|
| Energy | 21.08% |
| Consumer Staples | 19.06% |
| Healthcare | 15.68% |
| Industrials | 12.45% |
| Financials | 8.36% |
| Information Technology | 7.87% |
| Consumer Discretionary | 7.86% |
| Communication Services | 4.80% |
| Materials | 2.80% |
| Utilities | 0.04% |
Note: These allocations reflect SCHD’s positioning as of March 31, 2025.
The ETF maintains a strong emphasis on stable, dividend-paying sectors — especially Energy, Consumer Staples, and Healthcare — aiming to reduce volatility and deliver consistent income.
ℹ️ The most recent data available from Schwab Asset Management was published at the end of Q1 2025.
7.Rebalancing Methodology
Rebalance Frequency: Annually in March
Index Used: Dow Jones U.S. Dividend 100 Index
📌 Selection Criteria:
U.S.-based companies only
Minimum 10 years of consecutive dividend payments
Companies are ranked by a composite score based on:
ROA (Return on Assets, cash-flow based)
Debt-to-Equity Ratio
5-Year Dividend Growth Rate
Forward Dividend Yield
Liquidity and market cap screens also applied
⚖️ Weighting Rules:
Maximum 4% per stock
Maximum 25% per sector
❗ Even top-performing stocks may be removed if their metrics no longer meet the criteria.
For example, Broadcom (AVGO) was once a top holding, but was removed in the 2024 rebalance due to:
Rapid stock price increase
Declining dividend yield
Lower composite score
This highlights SCHD’s disciplined, valuation-aware filtering process.
8. Final Thoughts
SCHD is a rare breed — a dividend ETF that combines stability, quality, and long-term performance.
It pays regular quarterly dividends, raises payouts annually, and keeps its holdings in check with strict rebalancing rules.
📌 If you’re a younger investor, SCHD may not be ideal as your primary holding.
Growth-oriented ETFs like QQQ or SOXX may provide greater upside in the early stages of your portfolio.
That said…
✅ SCHD is not a bad ETF by any means — it’s just a different kind of tool.
✅ With its lower volatility and high consistency, it’s perfectly suited for long-term compounding.
✅ And if you can stick with any quality investment for 10+ years,
✅ You’re almost guaranteed to outperform the average retail investor.
⚠️ However, it’s worth noting that SCHD’s current sector composition leans heavily toward energy, consumer staples, and healthcare — sectors known more for stability than aggressive growth.
As a result:
- SCHD may struggle to match its past growth performance, and
- It could underperform compared to tech-focused ETFs in bull markets driven by innovation.
SCHD isn’t flashy, but it’s the kind of ETF that quietly builds real wealth over time — especially for those who value consistency over hype.
“While SCHD focuses on dividend-paying value stocks, broad-market ETFs like SPY offer a more growth-weighted exposure to the full S&P 500.”
👉 Read Post
“If you’re looking for more tech-driven upside, you might want to consider QQQM, which targets the Nasdaq-100 — a much more innovation-heavy index.”
👉 Read Post
👀 What’s Next?
In the next post, we’ll turn our attention to SOXX, one of the most popular semiconductor ETFs in the world.
If SCHD represents reliability, SOXX is all about innovation and explosive growth.
We’ll explore what makes it so compelling — and whether it deserves a spot in your portfolio.
📝 Disclaimer & Final Notes
Just to be clear — I’m not a financial advisor.
I’m simply sharing my personal investing journey here.
Please do what feels right for you. 🙂
Thanks for reading — and as always, invest smart and stay consistent.
See you in the next post! 🚀
Step by step — that’s how we build something lasting.
🔗 Sharing is welcome — but please credit the source (investorJB.com) when you do.