Wondering what my favorite dividend exchange-traded funds (ETFs) are? Well, this is Schwab U.S. Dividend Stocks ETF (NYSE: SCHD). It’s worth considering for your portfolio, as dividends can be powerful wealth creators – especially if you invest them in more stocks.
Here’s a look at the power of dividends and why you might consider this ETF. (Remember, an ETF is a fund that trades like a stock.)
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To see why I like dividend stocks, check out the chart below:
|
Dividend status |
Average annual total return, 1973-2024 |
|---|---|
|
Dividend growers and promoters |
10.24% |
|
dividend payer |
9.20% |
|
No change in dividend policy |
6.75% |
|
people who don’t pay dividends |
4.31% |
|
Dividend reduction and elimination |
(0.89%) |
|
Equal weight S&P 500 Index index |
7.65% |
Data source: Ned Davis Research and Hartford Funds.
look? Dividend payers are no slouch either. They can bring in a lot of passive income.
Charles Schwab U.S. Dividend Stocks ETF Tracking Dow Jones US Dividend 100 The index contains about 100 carefully selected stocks that have at least a 10-year track record of paying dividends and also appear to be tied to high-quality companies. Here’s how the Schwab ETF has performed in recent years:
|
ETF |
Recent production |
Five Year Average Annual Return |
10-Year Average Annual Return |
15-Year Average Annual Return |
|---|---|---|---|---|
|
Schwab U.S. Dividend Stocks ETF |
3.5% |
10.91% |
13.55% |
12.30%* |
|
Vanguard S&P 500 ETF |
1.1% |
13.82% |
16.09% |
13.77% |
Source: Morningstar.com, as of February 9, 2026.
*As of the date of establishment, October 20, 2011
I included the performance of the low-fee S&P 500 index fund for comparison, and you can see that the Charles Schwab ETF wasn’t far behind its performance while providing a lot of More income. Even better, healthy and growing dividend payers tend to increase their payouts over time. Here are the ETF’s largest recent holdings, which account for about 42% of the fund’s value:
|
in stock |
ETF weights |
|---|---|
|
Lockheed Martin |
4.60% |
|
Bristol-Myers Squibb |
4.29% |
|
Texas Instruments |
4.27% |
|
Chevron |
4.21% |
|
Merck |
4.20% |
|
ConocoPhillips |
4.13% |
|
Pepsi |
4.06% |
|
Verizon Communications |
4.01% |
|
Altria |
3.95% |
|
Coca Cola |
3.93% |
Data source: Morningstar.com, as of February 7, 2026.
