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The Schwab U.S. Dividend Equity ETF (SCHD) has long been a cornerstone for income-focused investors, but 2025 brings new challenges and opportunities.
With a trailing twelve-month yield of 3.49% and an SEC yield of 3.71% as of March 2025, SCHD remains competitive, but its position hinges on its ability to balance dividend growth, sector resilience, and cost efficiency.
Below, we dissect its performance, holdings, and competitive landscape to determine its standing in today’s market.
Performance: Consistency Amid Volatility
SCHD’s cumulative growth of a $10,000 investment reached $29,169 by February 2025, outperforming its benchmark (DJ US Dividend 100 TR USD) and the Large Value category.
Key metrics include a 1-year return of +14.39% (vs. +14.37% for its index) and a 5-year annualized return of +14.65%.
Its dividend growth has been particularly impressive, with payouts increasing by 179% from 2017–2024, driven by its focus on companies with 10+ years of consecutive dividend growth.
While SCHD’s beta of 1.00 suggests market-matching volatility, its defensive sector tilt (financials, healthcare, consumer staples) positions it to weather downturns better than growth-oriented peers like FDVV.
Holdings: Stability Over Speculation
SCHD’s 103 holdings are concentrated in large-cap dividend growers, with top positions including Lockheed Martin (4.26%), Amgen (4.20%), AbbVie (4.09%), and Coca-Cola (3.96%).
Sector allocations skew toward defensive industries: financials (18.3%), healthcare (16.4%), and consumer staples (14.3%). This contrasts sharply with tech-heavy ETFs like FDVV, which prioritize growth over stability. SCHD’s 0.06% expense ratio—among the lowest in its class—further enhances its appeal.
Dividend Yield vs. Growth: SCHD’s Dual Advantage
SCHD’s 3.57% yield outpaces many peers, including FDVV (2.91%) and SPYD (4.16%). However, its true strength lies in dividend growth: an 11.59% compound annual growth rate (CAGR) in payouts from 2017–2024, dwarfing FDVV’s 2.87%.
Its predictable distributions, with minimal quarterly fluctuations compared to FDVV’s volatile payouts, make it ideal for retirees or income-focused investors. For those prioritizing stability, SCHD’s yield outweighs the higher payouts of riskier ETFs like KBWY (8.87%) or XSHD (7.23%).
Competitive Landscape: SCHD vs. Alternatives
FDVV offers exposure to tech giants like NVIDIA and Apple, appealing to investors betting on AI-driven growth. However, its lower yield and higher volatility make it less suitable for income prioritization.
SPYD (4.16% yield) and RDIV (3.99%) sacrifice dividend growth for current income, with less consistent payout histories. Sector-specific ETFs, such as KBWY (REIT-focused) or NUDV (ESG-driven), may underperform in sector-specific downturns.
Conclusion: SCHD Remains a Top Choice for Income Investors
In 2025, SCHD’s blend of yield, growth, and stability solidifies its position as a premier dividend ETF.
While alternatives like FDVV or SPYD cater to growth or yield extremes, SCHD’s defensive holdings, low fees, and proven dividend resilience make it ideal for investors seeking long-term income compounding. For those prioritizing predictability over speculative upside, SCHD remains the gold standard.
Final Verdict: SCHD is still the best dividend ETF for most investors in 2025, but FDVV or sector-specific ETFs may suit those with higher risk tolerance or niche strategies.
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