Schwab ETF Offers High Dividend Stocks with Low Fees

A recent report highlights the advantages of investing in the Schwab U.S. Dividend Equity ETF, which features high-yielding stocks with low expense ratios. This may positively affect investor interest and stock prices of the ETF and its major holdings.

Date: 28-09-2024

AI Rating: 7

The report discusses the Schwab U.S. Dividend Equity ETF (SCHD), showcasing its focus on dividend-paying stocks with strong financial metrics. This ETF includes prominent companies like Home Depot (HD) and Verizon (VZ), both of which have remarkable records of increasing their dividends over time.

Home Depot, the fund's largest holding, boasts a 4.3% allocation with a dividend yield above 2%. It has a solid cash flow, with nearly $11 billion generated from operating activities in the first half of the year, significantly exceeding its $4.5 billion dividend obligation. This strong cash flow indicates that Home Depot can sustain its dividend payments. Therefore, it can be rated a 7 for its strong dividend consistency and cash flow.

Verizon, another major holding at 4.25%, offers a dividend yield of over 6% and has raised its dividend for 18 consecutive years. With $16.6 billion in cash flow from operations, Verizon has comfortably covered its capital expenditures of $8.1 billion and dividends of $5.6 billion. Furthermore, it is utilizing excess free cash for a significant acquisition, which suggests future growth potential. This position can be rated an 8 because of its robust cash generation and dividend growth record.

The Schwab ETF itself provides a high yield of 3.3%, attracting investors looking for reliable income. The low expense ratio of 0.06% allows investors to retain more dividend income compared to other ETFs, which generally charge higher fees. This feature likely makes SCHD an attractive investment option. Thus, the ETF can be rated a 7 for its expense management, which enhances investor returns.

Overall, the report paints a favorable picture for SCHD and its major holdings, suggesting that they are well-positioned to continue providing attractive dividend yields.

Stocks: SCHD HD VZ