Launched on October 20, 2011, the Schwab U.S. Dividend Equity ETF (SCHD) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Charles Schwab. It has amassed assets over $83.99 billion, making it the largest ETF attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.06%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.31%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Energy sector -- about 20.3% of the portfolio. Consumer Staples and Healthcare round out the top three.
Looking at individual holdings, Bristol Myers Squibb (BMY) accounts for about 4.25% of total assets, followed by Merck & Co Inc (MRK) and Conocophillips (COP).
The top 10 holdings account for about 40.44% of total assets under management.
Performance and Risk
SCHD seeks to match the performance of the Dow Jones U.S. Dividend 100 Index before fees and expenses. The Dow Jones U.S. Dividend 100 Index is designed to measure the performance of high dividend yielding stocks issued by U.S. companies that have a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios.
The ETF has added about 15.24% so far this year and was up about 17.26% in the last one year (as of 02/16/2026). In the past 52-week period, it has traded between $24.32 and $31.64.
The ETF has a beta of 0.73 and standard deviation of 13.3% for the trailing three-year period, making it a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab U.S. Dividend Equity ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SCHD is a great option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard High Dividend Yield ETF (VYM) and the Vanguard Value ETF (VTV) track a similar index. While Vanguard High Dividend Yield ETF has $74.61 billion in assets, Vanguard Value ETF has $169.89 billion. VYM has an expense ratio of 0.04% and VTV charges 0.03%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Schwab U.S. Dividend Equity ETF (SCHD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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