Schwab U.S. Dividend ETF Highlights Energy Giants for Growth

The Schwab U.S. Dividend Equity ETF prioritizes quality dividend stocks, currently favoring ConocoPhillips and Chevron. With both companies showing strong dividend growth and free cash flow generation, investors may find substantial opportunities in this ETF's exposure to the energy sector.

Date: 30-03-2025

AI Rating: 8

ETF Overview: The Schwab U.S. Dividend Equity ETF (SCHD) is a prominent choice among dividend investors, concentrating on stocks with strong dividend quality. Holding significant assets, this ETF reflects a keen focus on high-quality dividend stocks, including substantial stakes in ConocoPhillips (COP) and Chevron (CVX).

Dividend Performance: ConocoPhillips has recently accelerated its dividend growth, achieving 11% in 2022, 14% in 2023, and an impressive projected 34% in 2024. This trend positions them favorably among S&P 500 companies focused on dividend growth. Chevron also boasts a remarkable history, having increased its dividend for 38 consecutive years, with a promising current yield of 4.1%. Both companies are importantly characterized by their growing free cash flow, which allows for continuous investments in dividends.

Free Cash Flow Insights: Significant free cash flow generation is crucial here. Chevron expects a surge in free cash flow, targeting an additional $10 billion by 2026. This prediction is based on predicted high-margin growth within their production arm and ongoing cost-reduction strategies. Past fiscal year reports indicate Chevron generated $15 billion in free cash flow, with opportunities for further expansion following its Hess acquisition.

Investor Sentiment: The combination of their continued focus on high-quality dividends, increasing yields, and strong asset management makes both companies excellent investment opportunities for generating sustainable income. The SCHD ETF, in particular, appears strategically positioned to capitalize on these trends within its top holdings.

Stocks: COP CVX