If you invest in dividends, it’s important to diversify your portfolio so that you don’t rely on a few companies for all your dividend income. Trying to figure out which companies to invest in or how much to invest in each company can be daunting.
Luckily, there’s a great shortcut. when you purchase Schwab U.S. Dividend Stocks ETF (NYSE: SCHD)technically you are investing in 101 different companies. In other words, it’s a diversified dividend portfolio right out of the box.
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Here’s why you can hold onto this superstar dividend exchange-traded fund (ETF) forever.
It’s hard to avoid technology stocks these days. The “Big Seven” stocks have grown so much that they now account for about one-third of the total. S&P 500 Indexthe most popular U.S. stock market index.
The Schwab U.S. Dividend Stock ETF, on the other hand, is a compelling choice for any investor looking for more exposure to other areas of the market. it tracks Dow Jones U.S. Dividend 100™ Indexthe technical weight is only 8.2%.
The ETF’s top holdings include blue chip stocks such as Lockheed Martin, ConocoPhillips, Chevron, Verizon Communications, Bristol-Myers Squibb, Altria Group, Coca Colaand Pepsi. Most of these companies have dominated non-tech industries for decades and have a long history of paying and growing dividends.
The Charles Schwab U.S. Dividend Stocks ETF currently yields about 3.4%, so it could provide decent dividend income.
As exciting as artificial intelligence (AI) is, the future has suddenly become quite uncertain. AI bots have gone from glorified search engines to autonomous digital workers in just a few years. The recent sell-off in software stocks is a prime example of how disruptive AI innovation can be.
On the other hand, investors may place more value on non-tech companies, where AI may be a catalyst rather than a threat. For example, artificial intelligence may lead to more advanced automation and even humanoid robots. It helps pharmaceutical companies discover drugs. The list goes on.
The four largest sectors in the Charles Schwab U.S. Dividend Stocks ETF are energy, consumer staples, health care and industrials. As artificial intelligence changes the world, these are the potential winners. It makes ETFs a potentially excellent way to hedge against artificial intelligence disruptions while injecting dividends into your portfolio. Given this, it’s hard not to like ETFs as a permanent buy-and-hold investment idea.
