A portfolio of high-quality dividend-paying U.S. stocks at a rock-bottom price

Schwab U.S. Dividend Equity ETF is a solid core holding with an income orientation.

Ben Johnson, CFA 26 April, 2016 | 5:00PM

 Schwab U.S. Dividend Equity (SCHD) is a passively managed exchange-traded fund that homes in on high-quality income-producing stocks. The fund's index is composed of large, liquid companies that have paid dividends in each of the past 10 years, and it requires constituents to earn high marks on four fundamental metrics: cash flow/debt, return on equity, dividend yield and dividend growth. The resulting portfolio is one of the highest-quality among all U.S. large-cap dividend-oriented ETFs. Also, SCHD charges a 0.07% expense ratio, which makes it the least expensive dividend-oriented ETF available. This fund's high-quality portfolio and low cost make it a suitable core equity holding.

The fund can also be used in a more targeted fashion as a source of equity income in U.S. dollars. Relative to its large-cap dividend-oriented peers, this fund will likely generate an income stream that is more stable and that should grow with time. This is reflective of the methodology of its underlying benchmark, which specifically targets high-quality, steady dividend payers, and is not--as some of competing funds' benchmarks are--tuned to isolate constituents exclusively on the basis of high current and/or prospective payouts or yields.

Fundamental view

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

About Author

Ben Johnson, CFA

Ben Johnson, CFA  Ben Johnson, CFA, is director of global ETF research for Morningstar and editor of Morningstar ETFInvestor, a monthly newsletter.

© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies