The Schwab U.S. Dividend Equity ETF has outperformed the Nasdaq 100 with a 27% year-to-date return, driven by a market rotation toward value stocks and a significant portfolio reconstitution.

Key Points

• The Schwab U.S. Dividend Equity ETF (SCHD) has gained 27% year to date, outpacing the 19% return of the Nasdaq 100.
• A March index reconstitution shifted the portfolio, making Qualcomm and Texas Instruments the fund's two largest holdings.
• The fund maintains a defensive sector tilt, with approximately 18% in healthcare, 14% in energy, and 13% in consumer staples.
• Net assets for the fund have grown to roughly $95 billion as of May following strong performance and increased investor inflows.
• The fund provides a trailing twelve-month distribution of $1.05 per share, offering qualified dividends suitable for long-term retirement accounts.

Why it Matters

The fund's recent performance highlights a broader market shift where investors are prioritizing companies with consistent free cash flow over high-growth technology stocks. While the ETF remains a core tool for income-focused investors, the recent price surge means new buyers are entering at a higher valuation with a lower forward yield.