Latest news with #SCHD
Yahoo
3 days ago
- Business
- Yahoo
Should Vanguard High Dividend Yield ETF (VYM) Be on Your Investing Radar?
Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Vanguard High Dividend Yield ETF (VYM) is a passively managed exchange traded fund launched on 11/10/2006. The fund is sponsored by Vanguard. It has amassed assets over $59.05 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market. Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies. While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets. Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same. Annual operating expenses for this ETF are 0.06%, making it one of the least expensive products in the space. It has a 12-month trailing dividend yield of 2.85%. It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis. This ETF has heaviest allocation to the Financials sector--about 21.50% of the portfolio. Information Technology and Consumer Staples round out the top three. Looking at individual holdings, Broadcom Inc (AVGO) accounts for about 4.78% of total assets, followed by Jpmorgan Chase & Co (JPM) and Exxon Mobil Corp (XOM). VYM seeks to match the performance of the FTSE High Dividend Yield Index before fees and expenses. The FTSE High Dividend Yield Index which is consists of common stocks of companies that pay dividends that generally are higher than average. The ETF has gained about 2.09% so far this year and was up about 10.92% in the last one year (as of 06/03/2025). In the past 52-week period, it has traded between $114.78 and $135.06. The ETF has a beta of 0.78 and standard deviation of 14.69% for the trailing three-year period, making it a medium risk choice in the space. With about 593 holdings, it effectively diversifies company-specific risk. Vanguard High Dividend Yield ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VYM is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well. The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $68.10 billion in assets, Vanguard Value ETF has $133.44 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%. An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors. To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vanguard High Dividend Yield ETF (VYM): ETF Research Reports JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report Exxon Mobil Corporation (XOM) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report Vanguard Value ETF (VTV): ETF Research Reports Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
3 days ago
- Business
- Globe and Mail
This ETF Could Turn $500 Per Month Into a $851,000 Portfolio Paying $30,000 in Annual Dividend Income
Many investors aspire to build a portfolio that can pay them enough in dividends to fund their retirement goals. If you can find stocks that consistently raise their dividends, typically offsetting the impact of inflation and then some, you could find yourself in the enviable position where you can leave your principal investment untouched. Instead, you get to live off your dividends and pass along your stocks to your heirs or donate them to charity. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » But building a portfolio of high-quality dividend stocks isn't easy. Fortunately, there's one exchange-traded fund (ETF) that can take care of it for you. And if you invest early and consistently until retirement, you could end up with a portfolio worth over $850,000 that pays out around $30,000 in annual dividends. The best dividend ETF on the market Two simple factors that can help investors find companies that are likely to raise their dividends in the future are management's history of dividend increases and the company's financial health. If management has consistently increased the dividend and has the financial ability to keep doing so, it's very likely to continue the streak. That's why the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is an effective way to invest in high-yield dividend growth stocks. The index fund follows the Dow Jones U.S. Dividend 100 Index, which selects 100 stocks that have each increased their dividend annually for at least 10 consecutive years. It ranks each eligible company by several criteria: the ratio of free cash flow to debt, return on equity, dividend yield, and dividend growth rate. The top 100 companies (based on a composite ranking of all four criteria) are included in the index and weighted by market cap. As of this writing, the 10 largest companies (and their dividend yields) in the index are as follows: Coca-Cola (2.8%) Verizon Communications (6.2%) Altria (6.8%) Cisco Systems (2.6%) Lockheed Martin (2.8%) ConocoPhillips (3.7%) Home Depot (2.5%) Chevron (5.1%) Texas Instruments (3%) Abbvie (3.6%) As you can see, you get a mix of high-yield dividend stocks along with stocks that have strong growth supporting future payout increases. The result is a combined yield of about 4% based on trailing-12-month distributions from the ETF. But the forward yield should be even higher considering most constituents will pay out more over the next year than the previous year. With an expense ratio of just 0.06%, the cost of investing in this ETF is low and in line with some of the most popular index funds on the market. The Dow Jones dividend index's decision to weight constituents by market cap (with a 4% weight limit) makes it a very efficient index to track, and it lowers the risk tied to any high-yield stocks that aren't as fundamentally sound as the screener suggests. If the market bids down the value of those stocks, they will comprise a lower percentage of the index over time, while the high-quality businesses rise to the top. How $500 per month can turn into $30,000 in annual dividends Consistently investing $500 per month into the Schwab U.S. Dividend Equity ETF will eventually produce a sizable portfolio. Automatically reinvesting the quarterly distribution from the ETF will ensure a good total return on your investments as you accumulate shares over time. Since its inception in 2011, the fund has produced an annualized total return of 12.2%. That's an exceptional performance, but it's also worth pointing out the S&P 500 index has beaten the ETF with an annualized total return of 14.5%. The gap between the two has widened recently due to the outperformance of growth stocks since 2023. Historically, the S&P 500 averages returns around 10% per year, and 9% is more appropriate as a conservative estimate of the ETF's annual total return. The ETF's 4% distribution yield is also relatively high, but it may come down over time as the Federal Reserve lowers interest rates. That said, there's no telling what prevailing interest rates will be well into the future. A 3.5% yield is a reasonable estimate for the ETF's future yield. With those assumptions in mind, here's how a $500 monthly investment in the Schwab U.S. Dividend Equity ETF could grow over time if you automatically reinvest dividends. Years Investing Portfolio Value Forward Dividend Payment 1 $6,245 $219 5 $37,368 $1,308 10 $94,862 $3,320 15 $183,323 $6,416 20 $319,431 $11,180 25 $528,851 $18,510 30 $851,070 $29,787 Calculations by author. There are a few important caveats to the above scenario. First of all, it's based on forecasts for expected returns and dividend yields that could be well off the mark. More importantly, those returns won't be linear over time. The market is full of ups and downs. The sequence and size of those ups and downs could have a tremendous impact on the final result of your investments. That said, the longer your holding period, the more likely your results will look like the table above. Another important consideration is the impact of inflation: $30,000 won't have the same buying power in 30 years as it has today. That means investors will have to adjust their expectations or strategy if they want future purchasing power equivalent to $30,000 today. That could mean consistently increasing the monthly contribution, for example. While your actual results may vary from the above table, the key takeaway for most investors is to get started and remain consistent. The Schwab U.S. Dividend Equity ETF is a great option if you seek dividend growth and income in retirement. Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now? Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
Entrepreneur
4 days ago
- Business
- Entrepreneur
Why Schwab US Dividend Equity ETF Could Lead the Rotation
There might be a new rotation happening in the market, away from cyclical and growth stocks to head into safety and dividend-yielding stocks. This story originally appeared on MarketBeat [content-module:CompanyOverview|NYSEARCA:SCHD] A market rotation is about to begin, and most investors would regret not knowing where capital is likely to shift over the coming months and quarters. As is typical in the financial world, everything has to be tied to a benchmark to judge whether an asset class or specific name is overvalued or undervalued, and that is exactly where investors can begin today. When it comes to dividend stocks, yield is the king of this sort of analysis, but the question remains where that benchmark is set. Dividend yields can (and should) be tied to the leader in the yield space, which is the U.S. ten-year Treasury bond yield, currently hovering between 4.4% and 4.5%. Anything above the ten-year might be considered cheap or attractive in terms of price and yield, and the opposite if it falls below the bond yield. Moreover, investors must also consider the future direction of the bond market in the coming months, which is closely tied to the broader economic landscape. Bond yields could be lower in the future as part of the current business cycle, making dividend stocks (with attractive yields) the preferred place for capital to rotate into. This is exactly where the Schwab US Dividend Equity ETF (NYSEARCA: SCHD) comes into play. Schwab Dividend ETF Investors Can Be Early This exchange-traded fund (ETF) has a dividend yield of roughly 4% today. While it is below the benchmarked ten-year yield, the future matters more in today's setup, considering that the ten-year has been flattish and trending for the past six months. There were no breakouts despite inflation fears and trade tariff volatility, which is good news for those looking to get into dividend stocks. This means that the upside in bond yields is capped at this point, and the next leg could be lower depending on the Federal Reserve's (Fed) reaction to possibly cutting interest rates. That being said, entering this dividend ETF today might be too early, but at least investors can lock in today's price and yield before bonds move. At this point, it might already be too late to consider entering dividend stocks. Some Moves Are Happening Now Recently, the broader market trend seems to favor stocks in the consumer staples sector, indicating a preference for safety due to current market volatility. This trend is mirrored in recent institutional purchasing of this dividend ETF. As of the most recent quarter, up to $1.4 billion worth of institutional buying occurred in this ETF, demonstrating support for the underlying thesis. Remembering that today's yield in the ETF compared to the ten-year is not a call for an obvious buy, investors can somewhat assume that the so-called 'smart money' is willing to be early on this call. Besides this recent buying, investors can add the $14 billion also bought in this ETF over the past quarter, creating a broader trend in the rotation headed into safety and dividend income connected to the overall uncertainty currently present in the S&P 500 index. Price Action Leaves Valuable Clues [content-module:DividendStats|NYSEARCA:SCHD] Another way to examine this potential rotation is by analyzing the price action between this ETF and the S&P 500 index, particularly over the past quarter. The two names had been closely matched during the first quarter of 2025. However, this dynamic changed significantly after the Liberation Day of April 2025. When the new tariffs were announced, the S&P 500 and the Schwab Dividend ETF fell sharply. However, what happened afterward tells investors all they need to know. The S&P 500 recovered all of Liberation Day's losses in record time, while the dividend ETF remains within the pullback levels. This lackluster performance and failure to catch up can be attributed to the markets shifting their focus to growth stocks in the technology sector rather than seeking safety, a reaction that is to be expected when the broader market is on such an aggressive run higher. However, this gap will eventually need to be filled, and that is where the rotation into safety or high-yield stocks will come in handy. As the stock market approaches potential resistance at its previous all-time highs, uncertainty is likely to prompt investors to seek safe havens, such as bonds and dividend stocks. In this manner, a rotation into bonds will lower their yields, making the yields and upside in the Schwab Dividend ETF seem more attractive than they do today. This way, investors can get the best of both worlds: the income from dividends, as well as the upside inherent in equity investing. Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list. They believe these five stocks are the five best companies for investors to buy now... See The Five Stocks Here
Yahoo
18-05-2025
- Business
- Yahoo
Want Decades of Passive Income? Buy and Forget These 3 ETFs
The funds listed here all pay dividends at a higher rate than the average stock on the S&P 500. They provide excellent diversification because these funds all contain at least 75 stocks. 10 stocks we like better than Schwab U.S. Dividend Equity ETF › Investing in the stock market isn't all about trying to find the next big growth stock or swinging for the fences, hoping for a massive return. Many investors don't want to turn investing into a job that requires constantly monitoring stocks. They simply want investments that can generate recurring cash flow for years to come. A good way to accomplish that is by investing in exchange-traded funds (ETFs) which can allow you to do that easily. Not only can you quickly diversify your portfolio through ETFs, but some of them also offer attractive yields. The ETFs listed below focus on blue chip dividend stocks and offer high yields. For long-term investors who don't want to worry about the market, these can be safe investments to buy and forget about. The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) pays a yield of 4%, which is fairly high for such a diversified investment. By comparison, the average yield on the S&P 500 is just 1.4%. Another great feature of this fund is that its expense ratio is fairly low at just 0.06%, which ensures that fees don't chip away at your overall returns. The stocks selected for the fund pay dividends and have strong financials. Some of the fund's top holdings include Coca-Cola, Verizon Communications, and Home Depot. These are the types of big-name stocks that you can feel comfortable hanging on to for the long haul, and which can generate recurring dividend income for your portfolio along the way. The majority of the stocks are in energy, consumer staples, and healthcare, with those three sectors accounting for about 56% of the entire portfolio. In total, there are currently 103 holdings in the ETF. If you just want a good buy-and-forget investment that provides you with plenty of dividend income, the Schwab fund can be an excellent option. Over the past year, its total returns (which include dividends) are modest but stable at around 4%. While that trails the S&P 500 and its 13% performance over the same time frame, in return, you get a fairly diversified investment that doesn't contain as much risk as the overall market. A more diversified ETF to consider is the Vanguard High Dividend Yield Index Fund ETF (NYSEMKT: VYM), which has nearly 600 stocks in its portfolio. This is also a low-cost fund whose expense ratio is 0.06%. Its yield is, however, slightly lower at right around 3%, but that is still above average. There can be a bit less risk and volatility with this ETF simply because there are more holdings, which means that there's less vulnerability to how a single stock performs in the fund. The largest holding in the ETF is Broadcom, which accounts for 4% of the fund's total weight. Other recognizable names include JPMorgan and ExxonMobil. The Vanguard fund's main three sectors are financials (20%), healthcare (14%), and industrials (13%). In the past 12 months, this ETF's total returns are just under 11%, making it the best-performing fund on this list. Rounding out this list is the iShares Core High Dividend ETF (NYSEMKT: HDV). At just over 8%, its total returns over the past year put it in the middle of the pack. But overall, it's the same story: Investors are sacrificing some returns with these ETFs in exchange for safety. They can help protect you and make your portfolio less susceptible to large declines, but they usually underperform the market when it is doing well. With the iShares ETF, you'll be collecting a yield of 3.5%. It has a slightly higher expense ratio than the other two ETFs listed here at 0.08%, but the difference is minor and won't have a drastic effect on your overall returns. The fund is a bit more concentrated with 75 holdings in its portfolio. The focus is on high-quality dividend stocks, with a bit less diversification. ExxonMobil, Johnson & Johnson, and Progressive, which are its three top holdings, make up more than 18% of the ETF's overall weight. Consumer staples, energy, and healthcare are the three largest sectors here, representing close to 60% of the ETF's overall portfolio. All three of the ETFs listed here can be great options for income investors for the long haul. You get some excellent diversification, incur low fees, and collect fairly high yields. Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $826,385!* Now, it's worth noting Stock Advisor's total average return is 967% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot, JPMorgan Chase, Progressive, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom, Johnson & Johnson, and Verizon Communications. The Motley Fool has a disclosure policy. Want Decades of Passive Income? Buy and Forget These 3 ETFs was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
18-05-2025
- Business
- Yahoo
Is the Schwab US Dividend Equity ETF a Buy Now?
Schwab US Dividend Equity ETF uses a complex screening approach. The ETF's screens are likely to be very similar to the screens you would use to pick dividend stocks individually. Schwab US Dividend Equity ETF has a fairly attractive 4% yield. 10 stocks we like better than Schwab U.S. Dividend Equity ETF › Schwab US Dividend Equity ETF (NYSEMKT: SCHD) does a lot for the fairly tiny expense ratio of 0.06% that it charges. In fact, what it does is likely to be very close to what you might do if you were trying to build a dividend stock portfolio from the ground up. Here's why Schwab US Dividend Equity ETF is worth buying now, and, frankly, most of the time, if you want to outsource your dividend investing work to someone else. Technically, Schwab US Dividend Equity ETF is an index-tracking exchange traded fund. So, it just buys whatever the index "tells" it to. The real question for investors is, what's the index being tracked, and what does that index do? The first part is easy; the index is the Dow Jones U.S. Dividend 100 index. What it does, however, requires a little more explanation. The first hurdle for getting into the index is that a company must have at least 10 consecutive annual dividend increases under its belt. This is a typical screen used by dividend investors. (Real estate investment trusts (REITs), which are pass-through entities, are removed from consideration.) There are ETFs you can buy that simply stop at this step, but not Schwab US Dividend Equity ETF -- this is just the index's starting point. A composite score is created for each of the companies that pass the 10-year dividend increase screen. The score includes cash flow to total debt, return on equity, dividend yield, and a company's five-year dividend growth rate. Each component of the score looks at something that a dividend investor would likely consider, including financial strength, business performance, dividend yield, and the recent growth trends of the dividend. Again, Dow Jones U.S. Dividend 100 Index, and thus Schwab US Dividend Equity ETF, is doing the work you would be doing if you were buying stocks individually. The 100 highest-scoring stocks get into the index and ETF. They are market-cap-weighted, so the largest companies have the biggest impact on performance. The portfolio is updated annually, so the holdings are always on target with the index's goals. You get all of that work with one, low-cost investment. As the chart above highlights, Schwab US Dividend Equity ETF has tended to appreciate in value over time. However, notice that the dividend it pays has tended to rise over time, as well. So, you not only get capital appreciation but also a growing income stream. That's going to be a double win for most dividend investors, especially if they are tired of trying to pick stocks and would rather just live their lives. There will, of course, be better and worse times to buy Schwab US Dividend Equity ETF. However, its dividend yield, at around 4%, is currently toward the high side of its historical yield range. That hints that now is a "better" time to step aboard the ETF. That said, investors should probably always have Schwab US Dividend Equity ETF in the back of their minds. Its investment approach is so similar to what most dividend investors actually do in the real world that it is an easy solution if you want to add diversification to your portfolio or if you simply want to give up the chore of investing. All in, it is a strong ETF candidate just about all of the time. Part of the reason why Schwab US Dividend Equity ETF's yield is so high right now is that its largest sector exposure is energy. Oil prices have dipped, and that's pushed these stocks lower, which has, in turn, hampered Schwab US Dividend Equity ETF's performance. Don't let that stop you from buying it; the energy sector goes up and down fairly regularly. When energy prices eventually recover, as they always have in the past, the large exposure to energy will no longer be a headwind and the historically high yield here could be a thing of the past. Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Is the Schwab US Dividend Equity ETF a Buy Now? was originally published by The Motley Fool
