SCHD: Should You Buy the Schwab US Dividend Equity ETF for Its Dividend Yield?
24 Agosto 2023 - 7:30AM
Finscreener.org
Investing in exchange-traded
funds or ETFs allows investors to build a diversified portfolio and
lower overall risk. An ETF typically offers you exposure across
asset classes, sectors, industries, and geographies. Moreover, as
it holds a basket of stocks, you can gain access to quality
companies at a very
low cost.
There are several ETFs that have
gained popularity among long-term investors. One such fund is
the Schwab U.S. Dividend Equity
ETF (AMEX:
SCHD) which also offers you a dividend yield of
3.44%. Let’s see if you need to buy the SCHD ETF for its tasty
dividend yield right now.
What type of ETF is SCHD?
The SCHD aims to track the total
returns of the Dow Jones U.S. Dividend 100
Index before fees and
expenses. It is a low-cost fund that offers potential tax
efficiency. The Fund may serve as the core component of your
portfolio or complement your existing portfolios.
The SCHD tracks an index that is
focused on the quality and sustainability of dividends while
investing in fundamentally strong stocks across various
sectors.
With an average daily trading
volume of three million, the SCHD has close to $49 billion in
assets under management (AUM, making it one of the most popular
ETFs for U.S. investors.
The SCHD ETF has
returned:
- 5.4% in the last 12 months
- 15.4% in the last three years
- 11.67% in the last five years
- 11.67 in the last 10 years and
- 13.27% since its inception
We can see that the SCHD ETF has
successfully outpaced inflation and created significant wealth for
long-term investors.
What are the top holdings of the SCHD ETF?
The weighted average market cap
of the fund is $148 billion, with a price-to-earnings ratio of
13.9x. Moreover, the SCHD ETF has a price-to-cash flow multiple of
9x, a price-to-book ratio of 3.5x, and a return on equity of
38%.
The top five holdings of the ETF
account for 21.5% of the fund. These include blue-chip companies
such as:
Amgen stock
Valued at $137 billion by market
cap, Amgen (NASDAQ: AMGN) accounts
for 4.47% of the SCHD ETF and offers a yield of 3.3%. A pioneer of
the biotech industry, Amgen is among the largest healthcare
companies globally and offers a dozen products focused on cancer,
cardiology, inflammation, and neurology.
Cisco stock
The second-largest holding of the
SCHD, Cisco (NASDAQ:
CSCO), accounts for 4.33%
of the ETF. The tech giant creates internet protocol-based routers
and switches that help transfer vast amounts of data, voice, and
video packets across networks.
Cisco stock offers a dividend
yield of 2.8%.
AbbVie stock
Another research-based biopharma
company, AbbVie (NYSE: ABBV), is engaged in the development and sale of pharma
products. It accounts for 4.3% of the SCHD and offers a yield of
3.94%. AbbVie has a market cap of $260 billion and focuses on
treating conditions ranging from autoimmune diseases to oncology
and neurological disorders.
Broadcom stock
A semiconductor giant,
Broadcom (NASDAQ: AVGO) yields
2.23%, and its dividend payouts have risen by more than 20%
annually over the past decade. AVGO stock accounts for 4.25% of the
ETF.
Home Depot stock
The fifth-largest SCHD holding
is Home Depot (NYSE:
HD) which accounts for 4.18% of the fund. It also
offers a yield of 2.55%, and the stock has risen by 451% in the
last 10 years after adjusting for dividends.
Home Depot (NYSE:HD)
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