Investors Urged to Recognize Value of Dividends in ETFs

A report highlights the importance of dividend investing not only for retirees but for younger investors looking to build wealth. The Schwab U.S. Dividend Equity ETF (SCHD) is emphasized as an ideal choice, offering a balance of yield and growth potential, thus appealing to various investor needs.

Date: 15-11-2024

AI Rating: 8

The report emphasizes the significance of dividend stocks as a source of passive income, showing that dividends have historically contributed to a substantial portion of total returns in the S&P 500. Notably, dividends accounted for about 34% of total returns since 1940, with reinvested dividends representing 85% of total returns since 1960.

The Schwab U.S. Dividend Equity ETF (SCHD) is presented as an optimal investment choice. It offers exposure to 103 stocks, providing attractive dividend yields and effective diversification across multiple sectors. The ETF currently has an impressive yield of just under 3.5%, significantly higher than the S&P 500's yield of 1.3%. Additionally, the SCHD has demonstrated robust dividend growth, experiencing a 174% increase over the past decade.

Importantly, the report mentions metrics important for dividend stock selection, such as return on equity, highlighting that the Dow Jones U.S. Dividend 100 index employs a strict scoring system to include financially healthy companies that regularly increase their dividends. Given its diversified portfolio and strong performance, SCHD stands out as a suitable option for both short-term and long-term investors.

The overall sentiment in the report is positive towards SCHD and dividend investing as a strategy. Nevertheless, it notes the fund's lower exposure to technology stocks as a slight drawback compared to the S&P 500.

Stocks: SCHD BMY BLK CSCO HD CVX TXN LMT VZ AMGN UPS