SCHD: Likely The Best Dividend Fund Around

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pepifoto Over the past several years, dividend funds have lost favor amongst investors. Rising yields across other income producing assets such as bonds and real estate investment trusts mean the ...

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Rising yields across other income producing assets such as bonds and real estate investment trusts mean the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4677641-schd-likely-the-best-dividend-fund-around\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>SCHD: Likely The Best Dividend Fund Around</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSCHD: Likely The Best Dividend Fund Around\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-03-13 01:14 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4677641-schd-likely-the-best-dividend-fund-around><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>pepifoto Over the past several years, dividend funds have lost favor amongst investors. Rising yields across other income producing assets such as bonds and real estate investment trusts mean the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4677641-schd-likely-the-best-dividend-fund-around\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0256863811.USD","symbol_name":"ALLIANZ US EQUITY \"A\" INC","start_time":0,"source_url":"https://seekingalpha.com/article/4677641-schd-likely-the-best-dividend-fund-around","article_id":"2419072565","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1493832785/image_1493832785.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2419072565","pubTimestamp":1710263689,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"pepifoto Over the past several years, dividend funds have lost favor amongst investors. Rising yields across other income producing assets such as bonds and real estate investment trusts mean the mode","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","SCHW":"嘉信理财","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","BK4127":"投资银行业与经纪业","IE00B894F039.SGD":"Legg Mason ClearBridge - US Aggressive Growth A Acc SGD-H","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","BK4554":"元宇宙及AR概念","SDIV":"Global X SuperDividend ETF","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","SCHD":"Schwab US Dividend Equity ETF","SG9999014039.USD":"UNITED GLOBAL DURABLE EQUITIES (USDHDG) INC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","BK4533":"AQR资本管理(全球第二大对冲基金)","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","SG9999014013.SGD":"United Global Durable Equities Fund Dis SGD","AVGO":"博通","IE00B19Z9P08.USD":"LEGG MASON CLEARBRIDGE US AGGRESSIVE GROWTH \"A\" (USD) INC","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","LU0106831901.USD":"贝莱德世界金融基金A2","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","LU1814569148.SGD":"WELLINGTON GLOBAL QUALITY GROWTH \"D\" (SGDHDG) ACC","FDN":"First Trust Dow Jones Internet I","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","LU0965509283.SGD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (SGDHDG) INC","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","LU1244550577.SGD":"FTIF - Franklin Global Multi-Asset Income A (Mdis) SGD-H1","VYM":"红利股ETF-Vanguard"},"translate_title":"SCHD：可能是最好的分红基金","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SCHW":1,"VYM":1,"SDIV":1,"AVGO":1,"SCHD":1,"US10Y.BOND":0.9,"US12M.BOND":0.9,"US2Y.BOND":0.9,"FDN":0.9,"US30Y.BOND":0.9,"US3Y.BOND":0.9,"US5Y.BOND":0.9,"US6M.BOND":0.9,"US7Y.BOND":0.9,"US912797FS14.BOND":0.6,"US912796CX52.BOND":0.6,"US912797FH58.BOND":0.6,"US912797GB79.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GQ49.BOND":0.6,"US912797GW17.BOND":0.6,"US912797GX99.BOND":0.6,"US912797HE00.BOND":0.6,"US912797HG57.BOND":0.6,"US912797HH31.BOND":0.6},"content_text":"pepifoto Over the past several years, dividend funds have lost favor amongst investors. Rising yields across other income producing assets such as bonds and real estate investment trusts mean the modest yield offered by these popular funds has become comparatively less attractive. Today, there are other options for generating yield. Data by YCharts During the zero interest rate policy era, yields were universally suppressed. The 3%-4% yields offered by dividend funds were higher than the yield of traditional income producing assets like certificates of deposits, treasuries, or bonds. With few other options to earn income, dividend funds took the spotlight, offering a combination of growth and income that many found attractive. However, these funds have since underdelivered and performance has trailed the S&P 500. The gap between high-yielding stocks and medium duration treasuries has closed considerably. Data by YCharts One such fund which has lost investor favor over the past two years is the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD). After a decade of outperforming competitors and even the S&P 500, SCHD has slowed as a result of a variety of headwinds. Despite challenges, SCHD remains the gold standard of dividend ETFs. By looking primarily at near term performance, investors have thrown the baby out with the bath water. SCHD’s merit is being overlooked, as the long-term value lies in the fund’s index methodology. As SCHD begins to break out, let’s explore why the fund is one of the best in the space. Overview Data by YCharts SCHD is an exchange-traded fund sponsored by Charles Schwab (SCHW). It invests in stocks of companies in a diverse set of industries including energy, materials, industrials, consumer discretionary, consumer staples, health care, financials, information technology, communication services, and utilities. As its name suggests, SCHD is a dividend oriented ETF. It seeks to track the performance of the Dow Jones U.S. Dividend 100 Index. SCHD has been trading since 2011 and manages around $55 billion in total assets. As with every ETF from the SCHW lineup, SCHD is inexpensive. The expense ratio charged by the fund is just 0.06%. Data by YCharts Obviously, one of the most important aspects of SCHD is the dividend. Over the past decade, SCHD has averaged a dividend compound annual growth rate of 10.91%. This growth rate is significant and an important component of SCHD’s total return profile and attractiveness as an investment. As a point of comparison, SCHD’s dividend has outgrown the Vanguard High Dividend Yield Index Fund (VYM) by a considerable margin. Over the same time period, VYM averaged a 6.9% dividend compound annual growth rate. Data by YCharts The growing income stream also supports a growing share price. The share prices of dividend stocks are buoyed by the dividend yield to some extent. As a result, a rising dividend generally correlates to a rising share price. If the yield stays the same, share prices rise with the dividend. Data by YCharts Since SCHD is an index fund, it’s important to have a foundational understanding of how the portfolio is built. SCHD is unique in that it’s the only U.S. sponsored exchange-traded fund that currently tracks the Dow Jones U.S. Dividend 100 index.   S&P Global Index The Dow Jones U.S. Dividend 100 index and the Dow Jones International Dividend 100 index are two standout dividend indices that track the performance of domestic and international dividend paying equities, respectively. Both Dow Jones Dividend Indices use a similar set of screens. Multiple types of filters are applied to categorize holdings, including value, growth, and quality. There are additional screens in the international ETF.   S&P Global For both indices, their methodologies only include companies with a track record of at least 10 consecutive years of dividend payments. Selected holdings are then ranked by a metric called indicated annualized dividend (IAD) yield. IAD yield is an estimate of the dividends received over the next twelve months, which can include projected increases based on historical performance. The index removes constituents which are below the median IAD yield.   S&P Global The top-100 remaining stocks are selected based on a composite score of select financial metrics. These metrics include free cash flow to total debt, return on equity, and historical dividend growth rate. The international iteration of the index removes the bottom half of constituents with the highest three-year volatility. Both indices are reweighted on a quarterly basis. The screening approach is more intricate than other dividend funds, which might prioritize by market capitalization or dividend yield alone. SCHD’s index looks deeper at metrics at the company level. For example, by examining free cash flow and return on equity, the index assesses the sustainability of dividend payments. SCHD’s index is constructed in a comprehensive manner that assembles a list of 100 high quality, dividend paying companies. The index goes beyond simple market capitalization or yield rating, peering into corporate level financials. As a result, SCHD has a higher chance to succeed, selecting companies with stronger fundamentals than indices tracking one or two metrics. The Dividend Risk Dividends are not a one size fits all concept. As corporate finance evolves, dividends have begun to fall out of favor for the companies that SCHD prioritizes. As a reminder, SCHD does not invest in REITs, BDCs, bonds, or other similar income producing assets. SCHD focuses solely on dividend paying companies in the traditional sense, as reflected in the fund’s largest holdings.   SCHD Dividends have fallen out of favor for a variety of reasons. Additionally, dividend investing is challenging, especially for a fund focused on delivering high yield and growth. Let’s explore one such challenge. Yield is a fundamentally important piece for any dividend ETF, but yield always comes at a price. Popular dividend ETFs suffered from a dilemma over the past two years of rising interest rates. Either their yields were below risk-free assets such as treasuries, or funds were forced to explore assets with higher yields. With treasury rates still comfortably above 4.0% and credit instruments offering a normalized spread over this healthy yield, investing for dividend yield is an uphill battle. There are equity ETFs with higher yields. For example, the Global X SuperDividend ETF (SDIV) is the most extreme example. This fund promises shareholders a juicy yield of 11.89%. This yield can’t be ignored, especially for investors seeking consistent cash flow. Unfortunately, SDIV highlights why chasing yield is an inefficient strategy. Data by YCharts If we look at SDIV on a total return basis, we’ll find the fund is an inefficient nightmare. Total return is trailing, while most of the return comes in the form of a tax inefficient distribution. The fund chases the highest yielding companies in its investible universe; however, these companies are often out of favor, hence why the yields are so high to begin with. Dividends are priced efficiently, and those with strong growth potential are generally reflected in a relatively low yield. SDIV is somewhat of an isolated case, given its concerted focus on the highest yielders in its universe. But risks continue to apply to some of the largest and most popular ETFs, including SCHD. When we examine SCHD’s portfolio, we’ll notice some of the largest holdings are oriented towards the technology space. We can use Broadcom Inc (AVGO) as an example. AVGO is the largest holding in the index at 5.44%. AVGO has benefitted from tremendous growth in the semiconductor space, supported by their acquisitive strategy. AVGO has quickly become a legendary dividend growth stock. Data by YCharts AVGO was yielding nearly 3% two years ago, but the growth has since suppressed the yield. As the largest holdings in the index, it invariably impacts the yield of the index negatively. Put simply, you must pay for quality. However, paying for quality means there may not be much juice left. Are we paying for perfection in a way that dramatically limits our upside potential? Quality yield is easy to find. Just look at some of the largest companies in the world, and you’ll find an impressive set of dividend paying stocks which have grown those dividends at double-digit rates. However, their yields are priced accordingly. Data by YCharts How much risk is appropriate for a dividend fund to accept? At what point is yield being sacrificed in the name of quality? These are worthy questions to consider when seeking income, especially in a world where treasuries offer a material yield. Conclusion SCHD might just be the best dividend fund around. The fund is inexpensive, liquid, and has delivered tremendous long-term performance. The fund’s index provides a solid foundation for success. It is comprehensive, analyzing fundamentals to assemble a set of high quality, dividend paying stocks. Dividend investing is accompanied by a unique set of risk factors, especially while other income producing alternatives are in a strong position. Investors should consider whether a dividend fund is appropriate to meet their goals. Once that criterion is met, consider SCHD against its largest competitors and assess whether you like the fund's holdings and rebalancing approach.  As performance begins to break out, consider SCHD as a core ETF.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.0","shortVersion":"4.24.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2419072565"}