The Schwab U.S. Dividend Equity ETF (NYSE: SCHD) generally invests in stocks that are included in the index. The index is designed to measure the performance of high dividend yielding stocks issued by U.S. companies that have a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios. The fund will invest at least 90% of its net assets in these stocks.
- Net Assets: 48.888
- NAV: 72.50
- PE Ratio: 13.76
- Yield: 3.62%
- Expense Ratio: 0.06%
This ETF sports the lowest expense ratio among all ETFs. That’s a selling point for this passive fund. Investors have come to expect passive funds to outperform actively managed funds. That’s generally true, although active management still top rivals in categories such as corporate bonds and real estate. SCHD tracks the Dow Jones U.S. Dividend 100 Index. That benchmark focuses on stocks with what SCHD calls sustainable and “quality” dividends. That means the index and SCHD want stocks that show promise of being able to continue sharing their profits in the form of dividends with their stockholders.
Like most of our picks, SCHD favors value and core stocks rather than growth stocks. Value stocks tend to trade at lower prices than their fundamentals, such as dividends, earnings and sales, seem to call for. Core stocks straddle the border between value and growth stocks. SCHD is well diversified. Roughly 90% of its assets are in seven sectors: financial services, energy, consumer cyclicals, industrials, healthcare, consumer staples and tech. Therefore, SCHD is the best dividend paying ETF for long-term investors.