If you’re an investor who loves earning money from dividends, you’ve probably heard of SCHD—the Schwab U.S. Dividend Equity ETF. It used to be one of the most popular picks. In 2025, it’s not the “cool kid” anymore, but that doesn’t mean it’s lost its value.
Let’s break down why SCHD is still worth holding and what makes it a smart choice for long-term investors.
Investors Are Choosing Stability Over Hype
In recent years, many people have cleaned up their investment portfolios. Risky stocks, leftover SPACs, and extra ETFs have been sold off. Even other dividend ETFs like VYM are being replaced by SCHD.
Why? Because SCHD focuses on strong, reliable companies that pay consistent dividends. It’s simple, clean, and dependable—great for building a solid foundation in your portfolio.
Dividends Can Be a Warning Sign
Smart investors watch dividend growth closely. If a company stops increasing its dividend—or worse, cuts it—it could mean trouble. This is often a warning before the stock price drops.
By keeping an eye on dividend trends, you can spot problems early and avoid holding onto struggling companies.
SCHD Isn’t Flashy in 2025—But That’s Okay
SCHD isn’t getting much attention this year. Why?
The S&P 500 and growth stocks are booming, with returns over 20%.
SCHD’s return is around 9%, which feels slow in comparison.
Other ETFs promise huge yields—sometimes 20% or more.
But here’s the truth: those high-yield ETFs often come with big risks. SCHD isn’t about chasing quick wins. It’s about steady growth and protecting your money during tough times.
The Power of Growing Dividends
One of SCHD’s biggest strengths is how its dividends grow over time. In past years, it grew dividends by 8–11% annually. In 2025, that growth may slow to 5–6%, but that’s still solid.
Even if it’s not exciting in the short term, SCHD’s steady growth can lead to big results over decades—just like Warren Buffett’s investing style.
Why High-Yield ETFs Can Be Risky
High-yield ETFs often look attractive because they offer large payouts, but those high yields can come with trade-offs. Many use strategies like covered calls, which generate income by selling options. While this boosts short-term returns, it limits how much the ETF can grow when the market rises, reducing long-term gains.
Another concern is that these ETFs may focus on volatile sectors like energy or financials. If the market turns, these sectors can drop quickly, and the ETF’s value may fall with them. Plus, many high-yield ETFs pay out most of their income without reinvesting, which can slowly shrink the fund’s value over time.
Lastly, the income from high-yield ETFs can lead to tax complications. Some distributions may be taxed at higher rates or include return of capital, which can confuse investors. For those focused on long-term wealth, ETFs like SCHD—with steady dividends and disciplined growth—often offer a more reliable path.
SCHD’s Top Holdings Have Changed
SCHD updates its holdings regularly based on strict rules. That means the top companies in the fund can change.
Top 10 in 2023: Broadcom, Home Depot, AbbVie, UPS, Texas Instruments, Cisco, PepsiCo, Amgen, Coca-Cola, Chevron
Top 10 in 2025: Home Depot, Chevron, AbbVie, Altria, PepsiCo, Merck, ConocoPhillips, Cisco, Verizon, Amgen
Broadcom dropped out because its dividend got too low. SCHD sticks to its rules, which helps keep the fund focused on quality and income.
What’s Next for SCHD?
SCHD’s 9% return may seem slow compared to the S&P 500’s recent surge, but that’s normal. The S&P 500 won’t keep growing at 20% forever.
SCHD is built for the long term. It may not be flashy, but it offers:
Steady income
Reliable growth
Protection during market downturns
That’s the kind of investment that builds wealth over time.
Final Thoughts: SCHD Is Still a Strong Choice
SCHD isn’t trendy in 2025, but that’s actually a good thing. It’s not about hype—it’s about:
Simplicity
Stability
Long-term growth
If you want an ETF that can stand the test of time and help you build income year after year, SCHD is still a smart pick.
