Here's How Many Shares of SCHD You'd Need for $1,000 in Yearly Dividends

There are plenty of exchange-traded funds (ETFs) that focus on dividends, but one of the better go-to options is the Charles Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). It holds 102 stocks and has been a staple for many investors since it hit the market in October 2011.

SCHD's last four per-share dividend payouts were $0.2782, $0.2604, $0.2602, and $0.2488. The payouts fluctuate because dividend companies pay their dividends at different times, but if the total $1.0476 per share payout over the past year were to remain constant, you would need to own 955 shares of SCHD to receive $1,000 annually. As of market closing on Dec. 11, Charles Schwab U.S. Dividend Equity ETF was priced at $27.68 per share, which means it would cost around $26,435 to accomplish this if you were starting from scratch.

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To be included in SCHD, a company must have 10 consecutive years of dividend increases and a healthy balance sheet. This ensures companies aren't included solely because they have a high dividend yield, helping to avoid yield traps. SCHD's top three holdings are Cisco (4.75% of the ETF), Merck & Co. (4.65%), and Amgen (4.45%).

This ETF's current dividend yield is 3.8%, more than three times the S&P 500 average. This dividend yield will inevitably fluctuate as Charles Schwab U.S. Dividend Equity ETF's stock price changes, but it's just above the 3.6% dividend yield that SCHD has averaged over the past three years. If you're looking for a dividend ETF that can be a staple in your portfolio, Charles Schwab U.S. Dividend Equity ETF is surely it.

Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen, Cisco Systems, and Merck. The Motley Fool has a disclosure policy.