“In fact, during the past two years, SCHD has had the greatest aggregate dividend growth among all of its peers,” adds Johnson.
Four of SCHD’s top 10 holdings, a group that combines for almost 42% of the ETF’s weight, are Dividend Aristocrats, meaning they have dividend increase streaks of at least 25 years. A dividend increase streak is useful for getting investors interested in a stock or ETF, but there has to be more meat on the bone to sustain that dividend growth. SCHD features that added meat by focusing on other quality factors such as return on equity, cash flow to debt ratios, dividend yield and five-year dividend growth. [Why This Dividend Delivers for Investors]
SCHD has another advantage: The ETF’s sector weights indicate the fund could prove durable if interest rates rise. Although SCHD’s largest sector allocation is 20.8% to rate-sensitive consumer staples names, the ETF’s utilities weight is a scant 0.7%.
Conversely, SCHD allocates a combined 32.6% of its weight to the technology and industrial sectors, two groups with track records of remaining durable (and possibly outperforming) when rates rise.
Schwab US Dividend Equity ETF
