SCHD is the ticker symbol for the Schwab U.S. Dividend Equity ETF, one of the most popular dividend-focused exchange-traded funds in the market. It holds 100 U.S. stocks selected for their track record of paying dividends consistently and their overall financial strength. The fund tracks the Dow Jones U.S. Dividend 100 Index, and it has become a go-to choice for investors who want reliable income from their portfolio without picking individual stocks.
How SCHD Picks Its Stocks
SCHD doesn’t just grab every dividend-paying stock it can find. The underlying index applies a series of filters that narrow the universe of U.S. stocks down to 100 companies with strong fundamentals and proven dividend histories.
The first hurdle: a company must have paid dividends for at least 10 consecutive years. It also needs a minimum market capitalization of $500 million and enough daily trading volume to ensure liquidity. REITs (real estate investment trusts) are excluded entirely.
From the stocks that pass those initial screens, only the top half ranked by dividend yield move forward. Those remaining candidates are then scored on four financial measures:
- Free cash flow relative to total debt. Companies with zero debt rank first. This rewards businesses that generate plenty of cash and aren’t overleveraged.
- Return on equity (ROE). This measures how efficiently a company turns shareholder investment into profit.
- Dividend yield. The annual dividend payment as a percentage of the stock price.
- Five-year dividend growth rate. How much the company has increased its per-share dividend over the past five years.
Each stock is ranked on all four metrics, and the scores are combined into a single composite. The top 100 make the cut. This process runs once a year, with buffer rules that give existing holdings a slight edge so the fund isn’t constantly churning.
What’s Inside the Portfolio
SCHD holds exactly 100 stocks, and no single company dominates the fund. The largest positions as of early 2026 are Texas Instruments (5.43%), UnitedHealth Group (4.95%), Qualcomm (4.21%), Chevron (4.05%), and Coca-Cola (3.94%). Even the top holding represents only about one-twentieth of the fund.
The sector mix tilts heavily toward stable, cash-generating industries. Consumer staples make up about 19% of the portfolio, followed closely by health care at nearly 19% and energy at roughly 17%. Industrials and information technology each account for about 11%. This is a notably different profile from broad market index funds like the S&P 500, which are heavily weighted toward tech. SCHD’s tech allocation sits around 9 to 11%, meaning the fund behaves quite differently from the broader market during periods when technology stocks are driving most of the gains or losses.
Dividend Yield and Growth
SCHD pays dividends quarterly. Its trailing dividend yield has recently been around 3.39%, which is meaningfully higher than what you’d get from a broad market index fund (the S&P 500 typically yields around 1.2 to 1.5%).
What sets SCHD apart from many dividend funds isn’t just the current yield, though. It’s the rate at which that income has grown. Over the past decade, SCHD’s annualized dividend growth rate has been about 10.61%. Over five years, it’s averaged 9.15%, and over three years, 7.06%. In practical terms, if you bought SCHD and held it, the dollar amount of dividends you received each year would have roughly doubled over a decade. That combination of a solid starting yield and strong growth is the main reason the fund attracts so much attention.
How SCHD Compares to Similar Funds
The two most common alternatives investors weigh against SCHD are VYM (Vanguard High Dividend Yield ETF) and DGRO (iShares Core Dividend Growth ETF).
VYM casts a wider net, holding several hundred stocks with above-average dividend yields. Its current yield is about 2.35%, notably lower than SCHD’s 3.39%. Its dividend growth has also been slower: roughly 5% per year over the past decade compared to SCHD’s 10.61%. VYM offers more diversification across sectors and stocks, but the income stream grows at a more modest pace.
DGRO focuses on dividend growth rather than current yield, screening for companies that have increased dividends for at least five consecutive years. Its 10-year annualized dividend growth rate of 8.59% falls between SCHD and VYM. Both VYM and DGRO carry significantly more technology exposure than SCHD, which can be a plus during tech-driven bull markets but adds risk if that sector corrects.
SCHD’s tighter 100-stock portfolio and stricter financial quality screens mean it’s more concentrated but arguably pickier about the companies it owns. If your priority is a higher starting yield with strong dividend growth and less tech exposure, SCHD fits that profile better than either alternative.
Who SCHD Is Designed For
SCHD appeals most to investors who want regular income from their portfolio, whether they’re drawing on it in retirement or reinvesting dividends to compound their returns over time. Because the fund emphasizes financially healthy companies with long dividend track records, it tends to hold up better than growth-heavy funds during market downturns, though it may lag during strong rallies led by technology stocks.
It’s also popular as a core holding for people building a dividend growth strategy. The idea is straightforward: buy the fund, reinvest the dividends, and let the rising payout compound year after year. At a 10% annual dividend growth rate, the income from a position roughly doubles every seven years, which is a powerful dynamic for long-term investors.
SCHD is not a good fit if you’re looking for maximum total return in a bull market or heavy exposure to high-growth sectors. It intentionally underweights technology and excludes REITs. It’s a fund built for income reliability and financial quality, not for chasing the fastest-growing corners of the market.
Costs and How to Buy
SCHD is one of the cheapest dividend ETFs available. Its expense ratio is 0.06%, meaning you pay $6 per year for every $10,000 invested. That’s in line with the lowest-cost index funds on the market.
You can buy SCHD through any brokerage account that offers ETF trading. Most major brokerages charge no commission on ETF trades. It works in taxable accounts, IRAs, and Roth IRAs. If you hold it in a taxable account, keep in mind that the quarterly dividends are taxable income in the year you receive them, though a portion typically qualifies for the lower qualified dividend tax rate.