The Schwab U.S. Dividend Equity ETF (SCHD) is a top pick for income-focused investors, with a focus on high-quality dividend stocks that consistently pay dividends. Following its recent 13% decline in price, the fund now boasts an attractive yield of over 4%, outpacing the S&P 500’s 1.5% dividend yield.
The ETF tracks the Dow Jones U.S. Dividend 100 Index, which selects companies based on four quality factors: cash flow to total debt, return on equity, indicated dividend yield, and five-year dividend growth rate. This approach ensures a balance between dividend yield and payout growth, resulting in an attractive current income stream that should rise over time.
Many of the fund’s top holdings, such as ConocoPhillips (COP), have demonstrated strong dividend growth, with average annual dividend growth rates exceeding 8%. The ETF has produced impressive total returns since its inception in 2011, averaging 12.9% annually.
With its share price down 13% from its recent peak, investing in SCHD at current levels positions buyers for future long-term returns. This is a great fit for retirement accounts, generating passive income that can be reinvested to help cover living expenses in the future while also growing wealth over time.
However, investors should consider other top stock picks recommended by The Motley Fool’s Stock Advisor team, which may offer even better potential returns. By joining Stock Advisor and reviewing their latest top 10 list, investors can make informed decisions about their portfolio.
Source: https://finance.yahoo.com/news/why-top-dividend-etfs-13-082700497.html