Global dividend growth slowed in the third quarter and with the Federal Reserve poised to raise interest rates as many as three times next year, some income investors are growing wary of the prospects for dividend stocks and exchange traded funds.
Those scenarios remind income investors that being selective is key when evaluating dividend ETFs. Stocks with steady yields reassure investors of a company’s strong financial health.
Additionally, dividend-paying stocks typically outperform those that do not pay over the long haul, with less volatility, due to the compounding effect of dividends on the investment’s overall return. Over the past 40 years, companies that boost payouts have proven to be less volatile than their counterparts that cut, suspended or did not initiate or raise dividends.
The Schwab US Dividend Equity ETF (NYSEArca: SCHD) remains a dependable, solid way for income investors to remain involved with dividend stocks even in the face of rising rates.
SCHD includes 100 stocks based on strong fundamentals, dividend yields and consistent dividend payouts for at least 10 consecutive years, and it has a 2.90% 12-month yield. SCHD charges just 0.07%, or $7 per $10,000 invested.