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The Schwab U.S. Dividend Equity ETF (SCHD) is an exchange-traded fund that seeks to track the performance of an index composed of U.S. companies with a consistent history of dividend payments. The ETF is managed by Charles Schwab Investment Management and trades under the ticker SCHD on NYSE Arca.
Classified as an international equity ETF, SCHD aims to reflect, before fees and expenses, the performance of the stocks that make up its benchmark index. To achieve this objective, the fund employs a passive management strategy, maintaining a portfolio that seeks to replicate the composition and weighting of the index.
SCHD’s benchmark index is composed of U.S. companies selected based on fundamental criteria, including dividend history, sustainability of payouts, cash flow generation, and financial strength. Weighting takes into account metrics such as dividends paid and market capitalization, with periodic reviews for inclusion, exclusion, and rebalancing.
Diversification and sector exposure
SCHD provides exposure to the U.S. equity market with a focus on dividends, encompassing mature and financially sound companies. Sector diversification includes companies operating in areas such as:
- Consumer staples.
- Health care.
- Financials.
- Industrials.
- Information technology.
- Energy.
This composition results in a portfolio geared toward income generation and stability, with lower exposure to high-growth companies.
Structure and costs
Shares of SCHD are traded on the secondary market, while creation and redemption of shares are carried out by authorized participants, a mechanism that helps keep the ETF’s market price close to its net asset value (NAV).
The fund features a low expense ratio, typical of passively managed ETFs, and does not charge a performance fee. SCHD has a single share class and trades exclusively under the ticker SCHD.
History and evolution of the ETF
The Schwab U.S. Dividend Equity ETF was launched in 2011, amid growing demand for dividend-focused investment strategies, particularly in the post–global financial crisis environment. Since its inception, SCHD has established itself as a widely used dividend ETF, maintaining a consistent focus on replicating its benchmark index across different market cycles.
Between 2020 and 2024, the ETF reflected conditions in the U.S. equity market during periods of shifting monetary policy, elevated inflation, and increased demand for income-oriented investments, remaining broadly utilized by institutional and individual investors.
