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ETF Specialist

A Closer Look at One of Our Favorite Dividend ETFs

Schwab U.S. Dividend Equity ETF offers a high-quality portfolio at a very low price.

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In an earlier article, I emphasized that not all dividend exchange-traded funds are created equal. I examined 11 large-cap dividend-oriented ETFs that had all launched prior to 2007 and were put through the ringer in the 2008-09 bear market. There are another 12 large-cap dividend-oriented ETFs of relatively newer vintage that were omitted from this examination, as they were not subjected to the same stress test as their longer-lived peers. Among this relatively new crop,  Schwab U.S. Dividend Equity (SCHD) stands out.

Though the fund doesn't have a long enough track record to put it through the same scoring exercise I ran in my prior work, it ranks well in three of the four categories I examined. Specifically, it has a (slightly) above-average current yield, it has experienced above-average dividend growth, and it has a lower-than-average fee. In fact, during the past two years, SCHD has had the greatest aggregate dividend growth among all of its peers and has the lowest annual expense ratio among the group. Investors looking for a high-quality, income-producing, low-cost portfolio should put SCHD on their short list.

Ben Johnson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.