Income-minded investors have also typically gravitated toward these high quality companies as firms that regularly raise dividends also tend to be confident about their ability to continue paying the dividends as the dividend increases are also calculated in line with future growth.
“The fund balances a firm’s profitability level and yield so that it selects names that are more likely to be able to support their dividends,” according to Morningstar. “The fund assigns half of its equally weighted scoring metrics to profitability measures: cash flow/debt and return on equity. If a stock is more profitable, then it should be better equipped to maintain its dividend during a market drawdown or increase its dividend payment in the future.”
Morningstar has a silver rating on SCHD.
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