The Schwab U.S. Dividend Equity ETF (SCHD) is favored by income investors, gaining popularity since 2011 for its robust growth and a current dividend yield of 3.7%. It aims to track stable, high-yield U.S. companies, achieving a 12% CAGR in payouts. However, its dividends face multiple risks including economic downturns which could pressure corporate earnings. A significant portion of its portfolio comprises sectors sensitive to economic shifts, making it potentially vulnerable during financial crises, emphasizing that even quality stocks can fail to maintain dividends during downturns.
The Schwab U.S. Dividend Equity ETF (SCHD) is popular among income investors for its strong performance and growth since 2011, but it has inherent investment risks.
Dividend growth investing has shown to be a top strategy for wealth accumulation, with SCHD tracking high-yield, strong U.S. companies and achieving a 12% compound annual growth rate.
However, the ETF's current dividend yield of around 3.7% faces risks from economic downturns, corporate earnings pressure, and vulnerabilities in financials and consumer staples.
While SCHD's focus on quality companies with a demonstrated 10-year dividend growth history offers some protection, historical crises show no dividend is ever truly safe.
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