Schwab's SCHD ETF Is Mostly Solid, But 1 Top Holding Is Concerning

"The Schwab U.S. Dividend Equity ETF ( NYSEARCA:SCHD) is a popular income choice for retirees. The fund generates income by holding a portfolio of dividend-paying U.S. stocks selected for their financial strength and dividend consistency. The ETF tracks the Dow Jones U.S. Dividend 100 Index, which screens for companies with at least 10 consecutive years of dividend payments and strong fundamental metrics."

"Income comes directly from the dividends paid by these underlying companies, which SCHD then distributes to shareholders quarterly. Today, SCHD pays a 3.9% yield, well in excess of most other stocks and the S&P500. The top holdings in the fund drive the majority of this yield: Top Holdings and Dividend Yield Dividend Safety Analysis While all five of these companies are on the Dow Jones U.S. Dividend 100 Index, there is a range of payout ratios, dividend history, and overall safety with each position."

SCHD holds a portfolio of dividend-paying U.S. stocks chosen for financial strength and consistent dividends, tracking the Dow Jones U.S. Dividend 100 Index. The index requires companies to have at least 10 consecutive years of dividend payments and favorable fundamental metrics. Dividends paid by the underlying companies are collected by SCHD and distributed to shareholders quarterly. The ETF currently yields 3.9%, higher than most individual stocks and the S&P500. The largest fund holdings contribute most of the fund’s yield, but payout ratios, dividend track records, and overall dividend safety vary across those holdings.

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