Key Points

• The Schwab U.S. Dividend Equity ETF is a popular choice for retirees.

• The ETF holds a number of Dividend Kings, which have raised their dividends each year for at least half a century.

• The fund is less volatile than the S&P 500.

• 10 stocks we like better than Schwab U.S. Dividend Equity ETF ›

If you're looking for ETFs, a good first stop is typically an S&P 500 index fund.

After all, the benchmark index includes 500 of the largest American companies across every industry, and it has a track record of delivering an annual average return of 9% over its history. However, retirees often need more stability than what the S&P 500 offers, which is why they tend to seek out lower-risk investments such as dividend stocks and bonds.

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One popular choice among dividend investors is the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). The fund's goal is to track as closely as possible the Dow Jones U.S. Dividend 100 Index, which offers a high yield and quality screen that should be very attractive to retirees.

What's in the Schwab U.S. Dividend Equity ETF?

With net assets of $68 billion, the Schwab U.S. Dividend Equity ETF is one of the larger ETFs available to investors. It has a low expense ratio of just 0.06% and holds 100 stocks as of this writing.

The biggest sector in the ETF is energy, which makes up 21.1%, followed by consumer staples at 19.1% and healthcare at 15.7%. Companies in all three of those sectors are well known for often paying dividends.

Currently, the top three holdings are Texas Instruments, Chevron, and ConocoPhillips. Each stock represents about 4.3% of the fund as of this writing, and they're are solid dividend payers. Texas Instruments offers a 2.6% dividend, while ConocoPhillips and Chevron pay 3.5% and 4.8%, respectively. The Schwab U.S. Dividend Equity ETF itself pays a dividend yield of 4.0%, which is significantly better than the S&P 500's 1.2%.

How has the Schwab U.S. Dividend Equity ETF performed historically?

The Schwab U.S. Dividend Equity ETF has a solid track record of generating positive returns, but it has underperformed the S&P 500 since its inception in 2011, as you can see in the chart below.

Data by YCharts.

However, the chart also shows how the Schwab U.S. Dividend Equity ETF is less volatile than the S&P 500. In 2022, when the S&P 500 suffered through a bear market, the Schwab ETF experienced a more muted pullback because it lacks exposure to the high-profile tech stocks that soared during the pandemic and then crashed in 2022.

This reduced volatility is yet another reason for more conservative investors and retirees to consider the Schwab ETF.

Is SCHD right for you?

For retirees and others looking for a safe dividend ETF, the Schwab U.S. Dividend Equity ETF looks like a good bet.

There are other dividend ETFs available, but SCHD has emerged as one of the most popular choices thanks to its diversification across sectors and a track record of growth balanced with stability. Add to that the high yield and low expense ratio, and it becomes clear why this Schwab ETF is a great starting point for retirees.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $694,758!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $998,376!*

Now, it’s worth noting Stock Advisor’s total average return is 1,058% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 7, 2025

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron and Texas Instruments. The Motley Fool has a disclosure policy.

Key Points

• The market may be entering a period of subpar performance for growth stocks.

• Safer, income-oriented holdings may be on the verge of a market-beating phase.

• This may be a good time to invest in companies that are more off the beaten path.

• 10 stocks we like better than Schwab U.S. Dividend Equity ETF ›

Want to beat the market? Most investors do. It's just easier said than done. Indeed, the risk and effort needed just to attempt to outperform the market can easily result in your underperforming it. That's why plenty of investors are content to merely match the stock market over the long term by buying and holding index funds.

Every now and then though, it makes sense to rethink the strategy of simply investing in the market as a whole or owning its obvious leading names. This may be one of these times.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

That was the key takeaway from a recent interview with The Motley Fool's co-founder and CEO Tom Gardner. "If you're looking for good returns over the next three to five years that beat the market," he said, "I think you need to look where others aren't looking right now." And he's right.

The question is, what does this mean in practical, actionable terms for the average investor? To answer that, it's helpful to first look three to five years back in time, and then, look back a bit further.

Not the long-term norm

As it is in life, the one constant in investing is change. The way things are now isn't the way they were in the past, nor is it the way they'll be in the foreseeable future. One only has to look back over the past few years to see it.

The so-called "Magnificent Seven" stocks (and their close peers) that have performed so brilliantly since 2020? They weren't exactly superstars in the years prior. Apple was hit-and-miss between 2012 and 2016, for instance, against a backdrop of slowing iPhone sales. Nvidia shares, which soared in the mid-2010s, were wrecked in 2018 when the crypto-mining craze cooled off. Meta Platforms (then Facebook) and Tesla performed equally inconsistently during the half-decade leading up to 2020, even if for different reasons.

But all of these powerhouses happened to benefit from a confluence of events: the explosion of artificial intelligence, rising interest in electric vehicles, and even demand driven by the advent of the COVID-19 pandemic. And due in part to their size, the raw strength of those few companies set the bullish tone for the rest of the market.

AAPL data by YCharts.

That upward push wasn't particularly healthy or sustainable, however. Indeed, it has arguably been unhealthy, by virtue of the lack of overall contribution to it by a broader group of stocks.

For perspective, the S&P 500's seven biggest names today account for roughly one-third of its total value. Most of "the market's" bullishness in recent years was propelled by the aforementioned Nvidia and Meta, along with Microsoft and Amazon -- their far-above-average gains had an exaggerated impact on the S&P 500's performance specifically because they make up such large portions of the cap-weighted index.

To further clarify this, while some of these megacap stocks may now be back to record highs thanks to their big recovery from April's lows, fewer than a tenth of the S&P 500's constituents are actually in record-high territory. Nearly half of the index's tickers are still in the red for the year, in fact.

In short, the S&P 550 -- our most common proxy for the market -- has performed well for a while now thanks almost entirely to the gains of a handful of growth stocks in an environment that firmly favored them. That sort of cyclical dynamic can't be expected to last forever.

Here comes the cyclical shift

So now what?

Broadly speaking, some of the key conditions that tend to move growth stocks out of favor are already in place. Interest rates are higher and the economy has shifted to a slower-growing -- even if stable -- scenario. It's worth adding that the mania for artificial intelligence is finally settling down, with no obvious new trends on the horizon to stoke unchecked bullishness. Previous manias like electric vehicles and renewable energy aren't apt to be renewed either.

Ergo, without anything new or exciting enough to make investors ignore companies' lack of profits or outrageous valuations, Gardner believes "you need to look for dividend payers, more value-oriented investing," which rewards basic attributes like predictability and profitability. Something as simple as the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) or the Vanguard Value ETF (NYSEMKT: VTV) would fit the bill.

Picking stocks that are likely to be among the best performers for the next three to five years doesn't necessarily need to be a black-and-white, value-versus-growth affair, however.

"There are hundreds of good stocks to buy right now and own for the next five years, but they're probably not the most well-known [or] actively followed," said Gardner. "It's probably where people aren't looking. It's probably small caps. It's probably under-followed names."

Translation: Focus less on the now-struggling Magnificent Seven and FAANG components that have been considered must-have holdings for most of the past five years, and instead focus on the stocks of companies that are thriving even without the limelight.

Such businesses perhaps to consider now range from utility giant NextEra Energy to online bank SoFi Technologies to supermarket chain operator Kroger to beverage and snack powerhouse PepsiCo (which at its current share price is yielding 4.2%). These are relatively boring companies, but there's nothing boring about beating the market.

Take your time, but do embrace the change

So should this be an all-or-nothing strategic shift in your portfolio? No. Gardner is not suggesting any investor should simply upheave all of their familiar growth names and replace them with value stocks or dividend payers. Some growth stocks will perform well for the foreseeable future even if most large-cap growth stocks don't. Every prospective stock pick should still ultimately be made on a case-by-case basis based predominantly on the company's particular merits and prospects.

Investors should now be embracing a new philosophical mindset, though. Much of what has worked well in recent years -- like latching onto the market's biggest companies as they got bigger thanks to the advent of AI -- isn't apt to work as well going forward. Value stocks, dividend payers, and the more obscure stories may be better positioned to perform from here. Be sure to adjust your portfolio accordingly.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $687,764!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $980,723!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 179% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 7, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Meta Platforms, Microsoft, NextEra Energy, Nvidia, Tesla, and Vanguard Index Funds-Vanguard Value ETF. The Motley Fool recommends Kroger and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• SCHD and GCOW focus on higher-yielding dividend stocks.

• The ETFs have different strategies for selecting those stocks.

• They also have different fees and return profiles.

Many exchange-traded funds (ETFs) focus on holding dividend-paying stocks. While that gives income-seeking investors lots of options, it can make it difficult to know which is the best one to buy.

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) and Pacer Global Cash Cows Dividend ETF (NYSEMKT: GCOW) are two notable dividend ETFs. Here's a look at which is the better one to buy for those seeking to generate passive income.

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Different strategies for selecting high-yielding dividend stocks

The Schwab U.S. Dividend Equity ETF and the Pacer Global Cash Cows Dividend ETF aim to provide their investors with above-average dividend income by holding higher-yielding dividend stocks. The ETFs each hold roughly 100 dividend stocks. However, they use different strategies to select their holdings.

The Schwab U.S. Dividend Equity ETF aims to track the returns of the Dow Jones U.S. Dividend 100 Index. That index screens U.S. dividend stocks based on four quality characteristics:

• Cash flow to debt.
• Return on equity (ROE).
• Indicated dividend yield.
• Five-year dividend growth rate.

The index selects companies that have stronger financial profiles than their peers. That should enable them to deliver sustainable and growing dividends, and the Schwab U.S. Dividend ETF accordingly provides investors with a higher-yielding current dividend that should grow at an above-average rate. At its annual reconstitution, its 100 holdings had an average dividend yield of 3.8% and a five-year dividend growth rate of 8.4%.

The Pacer Global Cash Cows Dividend ETF uses a different strategy for selecting its 100 high-yielding dividend stocks. It starts by screening the 1,000 stocks in the FTSE Developed Large-Cap Index for the 300 companies with the highest free cash flow yield over the past 12 months. It screens those stocks for the 100 highest dividend yields. It then weights those 100 companies in the fund from highest yield to lowest, capping its top holding at 2%. At its last rebalance, which it does twice a year, its 100 holdings had an average free cash flow yield of 6.3% and a dividend yield of 5%.

Here's a look at how the top holdings of these ETFs currently compare:

SCHD	GCOW
ConocoPhillips, 4.4%	Phillip Morris, 2.6%
Cisco Systems, 4.3%	Engie, 2.6%
Texas Instruments, 4.2%	British American Tobacco, 2.4%
Altria Group, 4.2%	Equinor, 2.2%
Coca-Cola, 4.1%	Gilead Sciences, 2.2%
Chevron, 4.1%	Nestle, 2.2%
Lockheed Martin, 4.1%	AT&T, 2.2%
Verizon, 4.1%	Novartis, 2.1%
Amgen, 3.8%	Shell, 2.1%
Home Depot, 3.8%	BP, 2%

Data sources: Schwab and Pacer.

Given their different strategies for selecting dividend stocks, the funds have very different holdings. SCHD holds only companies with headquarters in the U.S., while GCOW takes a global approach. U.S. stocks make up less than 25% of its holdings. Meanwhile, SCHD weights its holdings based on their dividend quality, while GCOW weights them based on dividend yield. Given its focus on yield, GCOW offers investors a higher current income yield at 4.2%, compared with 3.9% for SCHD.

Costs and returns

While SCHD and GCOW focus on higher-yielding dividend stocks, their strategies in selecting holdings have a major impact beyond the current dividend income. Because SCHD is a passively managed ETF while GCOW is an actively managed fund, SCHD has a much lower ETF expense ratio than GCOW. SCHD's is just 0.06%, compared with GCOW's 0.6%. Put another way, every $10,000 invested would incur $60 in management fees each year if invested in GCOW, compared with only $6 in SCHD.

GCOW's higher fee really eats into the income the fund generates, which affects its returns over the long term. The fund's current holdings actually have a 4.7% dividend yield, whereas the fund's latest payout had only a 4.2% implied yield.

ETF	1-Year	3-Year	5-Year	10-Year	Since Inception
GCOW	11.2%	8.4%	15.5%	N/A	8.8%
SCHD	3.8%	3.7%	12.2%	10.6%	12.2%

Data sources: Pacer and Schwab. Note: GCOW's inception date is 2/22/16, while SCHD's is 10/20/11.

GCOW has outperformed SCHD over the past five years. However, SCHD has delivered better performance over the longer term. That's due to its lower costs and focus on companies that grow their dividends, which tend to produce the highest total returns over the long term.

SCHD is a better ETF for passive income

SCHD and GCOW hold higher-yielding dividend stocks, making either ETF ideal for those seeking passive income. However, SCHD stands out as the better one to buy because of its focus on dividend sustainability and growth. It also has a much lower ETF expense ratio. So it should provide investors with an attractive and growing stream of passive dividend income.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $692,914!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $963,866!*

Now, it’s worth noting Stock Advisor’s total average return is 1,050% — a market-crushing outperformance compared to 179% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Matt DiLallo has positions in Chevron, Coca-Cola, ConocoPhillips, Gilead Sciences, Schwab U.S. Dividend Equity ETF, and Verizon Communications. The Motley Fool has positions in and recommends Amgen, Chevron, Cisco Systems, Gilead Sciences, and Texas Instruments. The Motley Fool recommends BP, British American Tobacco, Equinor Asa, Lockheed Martin, Nestlé, Philip Morris International, and Verizon Communications and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.

The secret to retiring a multi-millionaire is quite simple. There is no easier way to accomplish this than by using a consistent dollar-cost averaging strategy. If you start investing early and use this investment strategy, your odds of retiring a multi-millionaire are extremely good.

Dollar-cost averaging is one of the simplest and most effective investing strategies out there. Instead of trying to time the market, you simply invest at regular intervals, regardless of where prices are.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

By investing a fixed amount every month, or every paycheck, you'll buy more shares when prices are low and fewer shares when they're high. Over time, this will smooth out your cost basis and help protect you from big market swings. It's a disciplined approach that will keep you investing through both bull and bear markets.

Some of the best investment vehicles to use this strategy with are exchange-traded funds (ETFs). With ETFs, you can get an instant portfolio of stocks without doing a lot of research. ETFs are also very accessible. You can feel comfortable starting with a small amount -- the key is just investing consistently.

With the power of compounding, dollar-cost averaging consistently into an ETF can help you retire a multi-millionaire. You also don't have to start with a large amount. If you are in your mid-twenties and have 40 years until retirement, a simple $500 investment each month can turn into a nearly $5 million nest egg by the time you hit retirement age with just a 12% average annual return.

If you're older, though, don't fret. A $1,000 investment each month at a 12% annual return can give you a $3 million portfolio after 30 years. However, the sooner you start, the better, as $1,000 each month for 40 years turns into nearly $10 million.

Let's look at five ETFs with strong track records that can help you retire a multi-millionaire.

Vanguard S&P 500 ETF

With a 12.8% return over the past decade, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is one of the first choices that investors should consider when looking to implement a dollar-cost-averaging strategy. The ETF replicates the performance of the S&P 500, which is widely considered the benchmark for the U.S. stock market.

The ETF is a nice blend of growth and value large-cap stocks, and with around 500 stocks in the fund, it gives investors instant diversity.

Vanguard Growth ETF

Growth stocks have been leading the way in the market for the better part of two decades. The Vanguard Growth ETF (NYSEMKT: VUG) is a great way to invest in this dynamic. With a 15.3% return over the last 10 years, this ETF is another solid choice for investors looking to use a dollar-cost-averaging strategy.

While the ETF officially tracks the CRSP US Large Cap Growth Index, this is essentially the growth side of the S&P 500. It's not as diversified as the S&P 500, with only around 165 stocks in its portfolio, but you're getting the best of the large-cap growth stocks through the ETF.

Invesco QQQ Trust

The Invesco QQQ Trust (NASDAQ: QQQ) has quite simply been one of the best-performing non-sector-specific or non-leveraged ETFs over the past decade. The ETF tracks the performance of the Nasdaq-100 index, which is made up of the 100 largest non-financial stocks that trade on the Nasdaq Stock Exchange. The Nasdaq has long been known as the exchange for emerging growth and technology companies, so the ETF is heavily weighted toward these types of stocks.

The ETF has generated an average annual return of 17.7% over the past 10 years, easily ahead of the return of the S&P 500 over the same stretch. Even more impressive is that it has consistently beaten the S&P 500 more than 87% of the time on a 12-month rolling basis.

Schwab U.S. Dividend Equity ETF

Investing in growth and technology stocks is not the only investment style, and the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is a nice value investment alternative. The ETF tracks the Dow Jones U.S. Dividend 100 Index, which consists of high-yielding U.S. stocks that have long track records of consistently paying out dividends.

While the ETF has only generated a 10.6% average annual return over the past 10 years, it has produced a 12.2% annual average return since its inception in October 2011. That's a solid long-term track record.

ARK Next Generation Internet ETF

If you're looking to swing for the fences, the ARK Next Generation Internet ETF (NYSEMKT: ARKW) could be right for you. Unlike the other ETFs, it is actively managed and does not follow an index. Instead, it is focused on investing in companies "that benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media." In addition to investing in stocks, it currently has an investment in an ETF that tracks the price of Bitcoin.

The ETF has been a strong performer, generating an average annual return of 18.2% over the past 10 years. However, you'll need a strong stomach, as the ETF has seen some wild swings over the past few years, as shown in the table below.

Year	2020 Year	2021 Year	2022 Year	2023 Year	2024 Year
Performance	157.08%	-16.65%	-67.49%	96.99%	42.27%

Data source: Ark Invest.

As such, this ETF is only for the most aggressive investors.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Geoffrey Seiler has positions in Invesco QQQ Trust and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Bitcoin, Vanguard Index Funds-Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

For most investors, simple is good. The Schwab US Dividend Equity ETF (NYSEMKT: SCHD) is a simple way to invest in reliable, high-quality dividend stocks. After all, if you have a life to live, you probably don't want to spend all your free time poring over stocks.

A roughly 4% yield and a unique stock selection process seal the deal when it comes to this smart investment choice. Here's what you need to know today.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

What has the Schwab US Dividend Equity ETF done?

Before getting into the Schwab US Dividend Equity ETF's investment approach, it's important to get a good feel for what it has achieved. Many dividend investors are looking to create a reliable income stream to live on in retirement.

So the goal is to own investments that produce reliable and hopefully growing dividends. Of course, a secondary hope is that the investment's value will rise as well, producing some capital appreciation.

SCHD data by YCharts.

The chart above shows that dividend investors have gotten exactly what they wanted from this exchange-traded fund (ETF). The current dividend yield of roughly 4% is in line with a "rule of thumb" retirement withdrawal rate that has led many dividend investors to focus on creating a 4% yield from their portfolios.

So, with that 4% yield, investors won't feel the need to touch the principal invested in the Schwab US Dividend Equity ETF. That can help with a feeling of financial security, or provide confidence that there will be money left to hand on to loved ones someday.

All that comes from one simple investment with a tiny expense ratio of 0.06%. To be fair, the Schwab US Dividend Equity ETF has not performed as well as an S&P 500 index ETF on a total return basis. But that's not the goal of the ETF. The goal is to provide a reliable income stream with some capital appreciation, and it does that very well.

Don't buy the Schwab US Dividend Equity ETF until you read this

You shouldn't buy any pooled investment just because of a few performance statistics. Just as with any other ETF or mutual fund, you are giving your hard-earned money to the Schwab US Dividend Equity ETF to manage on your behalf. You need to make sure you understand what is being done with that cash.

In reality, the Schwab US Dividend Equity ETF is just tracking the Dow Jones U.S. Dividend 100 Index. What you really need to know is what that index does, which is actually fairly complex. First, it pulls out all the companies that have increased their dividends for at least 10 consecutive years. Then real estate investment trusts (REITs) are eliminated from consideration. This forms the starting pool from which the index is created.

But the 100 stocks that make it into the index haven't been selected yet. The next step is to create a composite score for all of the stocks that pass the first round of screening. The score looks at cash flow to total debt, return on equity, dividend yield, and the company's five-year dividend growth rate. The 100 stocks with the highest composite scores are included in the index and are market-cap weighted.

SCHD Dividend Yield data by YCharts.

There's a lot going on there, but the point is that the Schwab US Dividend Equity ETF is focused on owning well-run and financially strong businesses that have attractive yields and strong histories of dividend growth. That's likely the same type of stock a dividend investor is trying to find.

Buying the Schwab US Dividend Equity ETF gets you an entire portfolio of such investments with just one buying decision. That's simple, and it allows you to spend your time doing other things, like spending time with family or playing golf.

Smart investors look for simple solutions that work

The Schwab US Dividend Equity ETF isn't going to give you everything an investor dreams of, but no investment can do so. What it will do is provide you with an attractive income stream and, if history is any guide, slow and steady growth of capital over time. If that's your goal, it would be a smart choice to invest in the Schwab US Dividend Equity ETF today.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Exchange-traded funds (ETFs) have changed the face of investing, helping investors to conveniently simplify their lives at low cost. But there are so many ETFs at this point that it can be confusing to find the ones that are best for your portfolio. Here are four of the best dividend ETFs for your portfolio if you lean toward dividend investing.

1. Vanguard Dividend Appreciation ETF

The first ETF up is the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG). It has the lowest yield here at around 1.8%. That's pretty miserly, but it is still notably higher than the 1.3% dividend yield of the S&P 500 index. The interesting overlay here is that, like the S&P 500 index, the Vanguard Dividend Appreciation ETF owns a fairly large number of stocks, with around 300 holdings.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

VIG data by YCharts.

The ETF's construction is fairly simple. The first step is to create a list of all U.S. companies that have increased their dividends annually for at least a decade. Then the highest-yielding 25% of the companies are eliminated (high yield is clearly not the focus here). The companies that are left are put into the Vanguard Dividend Appreciation ETF with a market-cap weighting.

The ETF hasn't kept pace with the S&P 500 index over time, but if you like the idea of a broadly diversified portfolio filled with stocks that have a history of regularly hiking their dividends, this could be the right ETF for you. Notably, the dividend has doubled over the past decade, which suggests that a lower starting yield can still have a big income effect if you hold this ETF for the long term.

2. Vanguard High Dividend Yield ETF

Next up is the Vanguard High Dividend Yield ETF (NYSEMKT: VYM). This exchange-traded fund is pretty simple, too. It takes all of the dividend-paying stocks on U.S. exchanges and then buys the 50% of the list with the highest yields. The portfolio is weighted by market cap. This ETF has over 500 holdings, so its portfolio is even more diversified than the Vanguard Dividend Appreciation ETF. The dividend yield is around 2.9%.

VOO Dividend Yield data by YCharts.

Given the focus on yield here, the Vanguard High Dividend ETF has lagged the S&P 500 index over time by an even greater amount than the Vanguard Dividend Appreciation ETF. But if your goal is to maximize the income your portfolio generates, it could be a great foundational investment. Essentially, these two Vanguard ETFs offer wide diversification and dividends in ways that will meet the investment needs of dividend growth investors and, in this situation, high yield investors.

3. SPDR Portfolio S&P 500 High Dividend ETF

The SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD), meanwhile, allows you to stick with S&P 500 index stocks, but do so with a high-yield focus. It simply buys the 80 highest-yielding S&P 500 stocks, weighting them equally. Equal weighting allows each stock to affect performance to the same degree and helps to reduce the risk that any one stock will overly hamper performance. The dividend yield is an attractive 4.5%, the highest on this list.

SPYD data by YCharts.

Don't buy this ETF looking for material dividend growth over time. The dividend is going to make up a material portion of an investor's total return, but it hasn't risen much over time. However, if you want to maximize income with a hand-selected portfolio of large market capitalization and economically important businesses, the SPDR Portfolio S&P 500 High Dividend ETF should be a top contender.

4. Schwab US Dividend Equity ETF

The Schwab US Dividend Equity ETF (NYSEMKT: SCHD) is by far the most complicated ETF on this list. But it might also be the most attractive, as it manages to mix dividend growth with an attractively high yield. The process starts with the list of companies that have increased their dividends annually for 10 consecutive years. A composite score is created for each of the companies that includes cash flow to total debt, return on equity, dividend yield, and a company's five-year dividend growth rate. The 100 highest-rated companies get included in the ETF and are market-cap weighted.

SCHD data by YCharts.

The end result has been a strongly performing share price, a growing dividend payment, and, today, a roughly 4% yield. The Schwab US Dividend Equity ETF isn't the most diversified, and it isn't the highest-yielding. But it provides a very attractive mix of the two. And, interestingly, it has managed to grow its dividend at a faster clip than the Vanguard Dividend Appreciation ETF.

For many dividend investors, the Schwab US Dividend Equity ETF's approach of using a fairly complex composite score to select stocks will be the most attractive choice. That said, investors need to recognize that this ETF isn't a simple one to understand. If you don't buy into the screening approach, you probably shouldn't buy the ETF.

Dividend options for every kind of dividend investor

Everyone has a slightly different approach to investing. This quartet of dividend-focused ETFs offers up four different dividend investing styles -- from dividend growth to high yield, and a notable choice that successfully manages to bring different investment tactics into one complex and high-yielding ETF. If you are looking for the best dividend ETF for your portfolio, one of these four ETFs will likely be exactly what you are trying to find.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of June 2, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Dividend Appreciation ETF and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.

Dividend ETFs come in all shapes and sizes. Some Dividend ETFs focus on a balanced approach, some focus on dividend growth, and some focus on higher yield. One of my favorite Dividend ETFs is the Schwab US Dividend Equity ETF (NYSEMKT: SCHD) because it is well balanced with a high yield and strong dividend growth, meaning you get the best of both worlds. SCHD is also a great complement to tech-heavy portfolios, as it helps offset that exposure.

Watch this short video to learn more, consider subscribing to the channel, and check out the special offer in the link below.

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*Stock prices used were end-of-day prices of May 9, 2025. The video was published on May 10, 2025.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $842,015!*

Now, it’s worth noting Stock Advisor’s total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Mark Roussin, CPA has positions in Schwab U.S. Dividend Equity ETF, Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF, and iShares Trust-iShares Core Dividend Growth ETF. The Motley Fool has positions in and recommends Vanguard Dividend Appreciation ETF and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.

Mark Roussin is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link, they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

Investing in the stock market isn't all about trying to find the next big growth stock or swinging for the fences, hoping for a massive return. Many investors don't want to turn investing into a job that requires constantly monitoring stocks. They simply want investments that can generate recurring cash flow for years to come.

A good way to accomplish that is by investing in exchange-traded funds (ETFs) which can allow you to do that easily. Not only can you quickly diversify your portfolio through ETFs, but some of them also offer attractive yields.

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The ETFs listed below focus on blue chip dividend stocks and offer high yields. For long-term investors who don't want to worry about the market, these can be safe investments to buy and forget about.

Schwab U.S. Dividend Equity ETF

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) pays a yield of 4%, which is fairly high for such a diversified investment. By comparison, the average yield on the S&P 500 is just 1.4%.

Another great feature of this fund is that its expense ratio is fairly low at just 0.06%, which ensures that fees don't chip away at your overall returns.

The stocks selected for the fund pay dividends and have strong financials. Some of the fund's top holdings include Coca-Cola, Verizon Communications, and Home Depot. These are the types of big-name stocks that you can feel comfortable hanging on to for the long haul, and which can generate recurring dividend income for your portfolio along the way.

The majority of the stocks are in energy, consumer staples, and healthcare, with those three sectors accounting for about 56% of the entire portfolio. In total, there are currently 103 holdings in the ETF.

If you just want a good buy-and-forget investment that provides you with plenty of dividend income, the Schwab fund can be an excellent option. Over the past year, its total returns (which include dividends) are modest but stable at around 4%. While that trails the S&P 500 and its 13% performance over the same time frame, in return, you get a fairly diversified investment that doesn't contain as much risk as the overall market.

Vanguard High Dividend Yield Index Fund ETF

A more diversified ETF to consider is the Vanguard High Dividend Yield Index Fund ETF (NYSEMKT: VYM), which has nearly 600 stocks in its portfolio. This is also a low-cost fund whose expense ratio is 0.06%. Its yield is, however, slightly lower at right around 3%, but that is still above average.

There can be a bit less risk and volatility with this ETF simply because there are more holdings, which means that there's less vulnerability to how a single stock performs in the fund. The largest holding in the ETF is Broadcom, which accounts for 4% of the fund's total weight. Other recognizable names include JPMorgan and ExxonMobil.

The Vanguard fund's main three sectors are financials (20%), healthcare (14%), and industrials (13%). In the past 12 months, this ETF's total returns are just under 11%, making it the best-performing fund on this list.

iShares Core High Dividend ETF

Rounding out this list is the iShares Core High Dividend ETF (NYSEMKT: HDV). At just over 8%, its total returns over the past year put it in the middle of the pack. But overall, it's the same story: Investors are sacrificing some returns with these ETFs in exchange for safety. They can help protect you and make your portfolio less susceptible to large declines, but they usually underperform the market when it is doing well.

^SPX data by YCharts.

With the iShares ETF, you'll be collecting a yield of 3.5%. It has a slightly higher expense ratio than the other two ETFs listed here at 0.08%, but the difference is minor and won't have a drastic effect on your overall returns.

The fund is a bit more concentrated with 75 holdings in its portfolio. The focus is on high-quality dividend stocks, with a bit less diversification. ExxonMobil, Johnson & Johnson, and Progressive, which are its three top holdings, make up more than 18% of the ETF's overall weight. Consumer staples, energy, and healthcare are the three largest sectors here, representing close to 60% of the ETF's overall portfolio.

All three of the ETFs listed here can be great options for income investors for the long haul. You get some excellent diversification, incur low fees, and collect fairly high yields.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 12, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot, JPMorgan Chase, Progressive, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom, Johnson & Johnson, and Verizon Communications. The Motley Fool has a disclosure policy.

Are you looking to build a worry-free, passive long-term portfolio that will allow you to focus on other things while growing your money? Buying and holding a handful of exchange-traded funds (or ETFs) is the answer, of course, and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) remains a top choice.

If you're truly looking for lifetime holdings though, you may want to consider a slightly different solution that allows you to adjust your overall allocation as time marches on. Namely, you'll want to buy a handful of different (but complementary) ETFs that can be individually scaled back or added to as your risk tolerances change.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

If you have $1,000 in cash available to invest that isn't needed for monthly bills, to pay off short-term debt, or to bolster an emergency fund, here's a combination of ETFs to consider that will likely set most investors up for a lifetime of strong performance.

Vanguard Growth ETF

If this really is going to be a "forever" portfolio, it's a reasonably safe bet that growth is a priority for most of the time frame in question. The Vanguard Growth ETF (NYSEMKT: VUG) will handle this part of the overall job nicely.

Just as the name suggests, the Vanguard Growth ETF holds a basket of growth stocks. The fund currently holds significant stakes in Apple, Microsoft, and Nvidia ... some of the market's top-performing growth names of late. Although this company weighting evolves over time as some companies' market caps outgrow others, this ETF gives you a great shot at major long-term capital gains.

Data by YCharts.

There's a very particular reason, however, you might want to own the Vanguard Growth ETF instead of seemingly similar alternatives like the Invesco QQQ Trust, which holds many of the same stocks. That's the fact that this fund is meant to mirror the CRSP U.S. Large Cap Growth Index. (CRSP stands for the Center for Research in Security Prices.)

That won't mean much to most people. This might get your attention though: The CRSP Large Cap Growth Index largely sidesteps the common problem of taking on too much exposure to the market's very biggest companies, which in turn leaves investors vulnerable to sizable setbacks once the tide finally turns against these top names.

That hardly makes it an "equal weight" index, to be clear -- it's still measurably top-heavy.

The fund is top-heavy to a degree that's tolerable and even a little desirable, however, by virtue of ensuring a little bit of overexposure to companies that are becoming much bigger due to actual top- and bottom-line growth.

Schwab U.S. Dividend Equity ETF

Growth stocks aren't the only way for your portfolio to achieve net growth, of course. It can also be done by a slow and steady (and ever-rising) flow of fresh cash into the account, which is then used to purchase more of whatever's generating that income. For some investors, that will be bonds and other fixed-income instruments. For most people though, this income will come from dividend-paying stocks.

The irony? High-quality dividend-paying stocks often end up outgaining the broad market anyway.

Mutual fund company Hartford crunched the numbers, determining that since 1973, stocks of companies that were able and willing to consistently grow their dividend payments produced average annual net gains of more than 10% (assuming reinvestment of those dividends) while stocks that didn't dish out any dividends didn't perform half as well. Moreover, reliable dividend payers were the market's least volatile stocks during this stretch, making them easier to stick with during turbulent times.

Data by YCharts.

What gives? The best explanation is the argument that quality always eventually shines through, and a reliably growing dividend is a good sign that a company is solid and well-run. Although there's certainly the occasional exception to this norm -- think non-dividend-paying Nvidia -- identifying these exceptions isn't always easy. You should invest based on your best odds, particularly when you're thinking in terms of a lifetime.

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is arguably the best way to plug into this dividend-driven dynamic. Based on the Dow Jones U.S. Dividend 100™ Index, this ETF doesn't simply hold what appear to be the market's most promising dividend stocks. In addition to requiring at least 10 consecutive years of annual dividend increases, inclusion in this index also considers fundamental factors like free cash flow versus debt, return on equity, and its typical dividend growth rate. Each prospective constituent is then ranked on these metrics to screen out all tickers other than the best 100 names.

While this approach seems quite mechanical, that's the reason it works so well. There's no misleading emotion, presumption, or bias built into the selection and rebalancing process.

iShares U.S. Technology ETF

Finally, add the iShares U.S. Technology ETF (NYSEMKT: IYW) to your list of ETFs to buy and hold for a lifetime if you've got $1,000 -- or any other amount of money -- you'd like to put to work for a while.

It's obviously different than either of the other two exchange-traded funds suggested here, both of which represent a unique investing school of thought. A sector-based fund is more strategically precise, calling into question whether or not it's actually capable of being a true lifetime holding. And maybe it isn't. It would be shocking, however, if the technology sector wasn't a great one to plan on holding for the long haul, even if you can't fully see its future.

Data by YCharts.

Think about it. Ever since personal computers began proliferating back in the late 1990s, the world has increasingly become digitized. Automobiles have them on board, and people would struggle to function without the mini mobile computer they now carry around in their pocket or purse. Artificial intelligence is now being used by the pharmaceutical industry to discover, design, and digitally test new drugs. Factories are made more efficient by being able to instantly share and create actionable data. At the heart of all of it is technology, and now that we've seen what it can do, we're certainly not going back to the "old way" that was less efficient and less effective. Now, one of the world's most commonly asked questions is: How can we use technology to make things even better?

There's more than one exchange-traded fund that would fit this bill, but the iShares U.S. Technology ETF is arguably the best all-around prospect thanks to how it weights its holdings.

Built to mirror the performance of the Russell 1000 Technology RIC 22.5/45 Capped Index, this fund -- like the aforementioned Vanguard Growth ETF -- at least attempts to maintain a reasonably balanced allocation even when the market itself is becoming top-heavy thanks to the ongoing growth of a small handful of massive companies. As Russell explains in a factsheet on the index, "At the quarterly index reviews, all companies that have a weight greater than 4.5% in aggregate are no more than 45% of the index, and no individual company in the index has a weight greater than 22.5% of the index."

This approach doesn't always perfectly accomplish its goal. Right now, for instance, Microsoft, Nvidia, and Apple collectively account for about 45% of the index's value. That's not particularly well balanced.

The weighting rules will help more often than not in the long run though, and will certainly help more often than they hurt.

Should you invest $1,000 in Vanguard Index Funds - Vanguard Growth ETF right now?

Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 12, 2025

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard Index Funds - Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Investing in the stock market can seem like a daunting task. There are so many options available. Making matters worse, there's so much uncertainty in the air these days with tariffs and their potential impact on the economy and stock market.

If you're feeling nervous about stocks and picking individual ones, one solution is to invest in a top exchange-traded fund (ETF). These investment vehicles can provide broad exposure to the market's long-term upside with less risk. A simple one to start with is the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). It holds a portfolio of high-quality dividend stocks that can provide investors with a tangible return during uncertain times in the form of dividend income. For example, investing $1,000 into this fund would at its current payout produce about $40 of dividend income each year. That's only part of the draw, which is why it's such a great fund to buy right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Turning cash into cash flow

The Schwab U.S. Dividend Equity ETF has a very simple strategy. It tracks an index (Dow Jones U.S. Dividend 100 Index) that screens companies based on the quality of their dividends and financial profiles. The result is a list of 100 companies with higher dividend yields, strong dividend growth rates, and healthy financial profiles.

For example, the fund's top holding is Coca-Cola (NYSE: KO). The beverage giant currently has a dividend yield of nearly 3%, which is about double the yield of the broader market (the S&P 500's dividend yield is less than 1.5%). Coca-Cola increased its dividend payment by 5.2% earlier this year. That marked the 63rd consecutive year it increased its dividend. It's part of the elite group of Dividend Kings, companies with 50 or more years of annual dividend growth. The company backs its dividend with strong free cash flow and a top-notch balance sheet.

At the fund's annual rebalancing last month, its holdings had an average dividend yield of 3.8%. That yield has crept up as the stock market (and the ETF's value) has declined in recent weeks and is now up over 4%. At that rate, a $1,000 investment in the fund would produce more than $40 of annual passive income.

Meanwhile, the current group of holdings has delivered an average dividend growth rate of 8.4% over the past five years. Because of that, the ETF should steadily pay out more cash as its holdings continue increasing their payouts:

SCHD Dividend data by YCharts

Dividend income is only part of the draw

The likely growing stream of dividend income supplied by the Schwab U.S. Dividend Equity ETF provides investors with a solid base cash return. While the payment will ebb and flow each quarter based on when the underlying companies make their dividend payments, it should continue to steadily head higher as they grow their dividends. Given the strength of their financial profiles, these companies should continue increasing their payouts even if there's a recession.

That rising income stream is only part of the return. The share prices of the companies held by the fund should increase in the future as they grow their earnings in support of their rising dividends.

Over the long term, dividend growth stocks have historically produced excellent total returns. According to data from Hartford Funds and Ned Davis Research, dividend growers and initiators have delivered an average annual return of 10.2% over the past 50 years. That has outperformed companies with no change in their dividend policy (6.8%), non-dividend payers (4.3%), and dividend cutters and eliminators (-0.9%).

The Schwab U.S. Dividend Equity ETF has delivered similarly strong returns throughout its history. It has produced an 11.4% annualized return over the past decade and 12.9% since its inception in 2011. While there's no guarantee it will earn returns at those levels in the future, its focus on the top dividend growth stocks puts it in an excellent position to continue delivering strong returns for investors.

A great fund to buy right now

With the stock market slumping this year, shares of the Schwab U.S. Dividend Equity ETF are down about 15% from the high point earlier in the year. That's a great entry point for this high-quality fund. It positions investors to generate lots of dividend income while potentially capturing strong total returns over the long term.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Matt DiLallo has positions in Coca-Cola and Schwab U.S. Dividend Equity ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

For years, the Schwab US Dividend Equity ETF (NYSEMKT: SCHD) has been one of the best dividend-focused exchange-traded funds (ETFs) for investors to buy. The ETF has shown its ability to compound wealth through share price appreciation, high dividend yield, and strong dividend growth.

At the end of March, Schwab US Dividend Equity ETF went through its annual reconstitution, and now we have a slew of new stocks that have been added to the portfolio and stocks that have been removed. In today's video, I will discuss the changes as well as the new sector breakdown.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Watch this short video to learn more, consider subscribing to the channel, and check out the special offer in the link below.

*Stock prices used were end-of-day prices of March 23, 2025. The video was published on March 24, 2025.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $509,884!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $700,739!*

Now, it’s worth noting Stock Advisor’s total average return is 820% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Mark Roussin, CPA has positions in Schwab U.S. Dividend Equity ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Mark Roussin is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link, they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.