Schwab US Dividend Equity ETF

SCHD

Market cap $85.9B

Schwab U.S. Dividend Equity ETF (SCHD) has outperformed in 2026, up over 11% YTD versus a flat SPY. Energy sector holdings, including APA (+52.33%) and SLB (+29.15%), have driven SCHD's strong performance. 31 SCHD constituents posted double-digit YTD returns, highlighting the ETF's diversified outperformance.

In late March, the Schwab U.S. Dividend Equity ETF saw one of its largest-ever annual portfolio adjustments. The underlying index the ETF followings greatly reduced its energy exposure after a big run.

SCHD offers a strategic hedge against rising inflation, historically outperforming growth-tilted indexes when energy prices climb and consumer price indices accelerate toward multi-year highs. Recent portfolio rebalancing has increased allocation to the defensive healthcare sector, positioning the fund to benefit from price-inelastic demand and historically low relative valuations. With nearly 17% energy allocation, the fund captures direct top-line growth from surging crude prices while maintaining high-quality dividend yields from global oil majors.

The 2026 market has turned dividend investing upside down. SCHD is surging while the S&P 500 stumbles, and most investors have no idea how to position themselves. There is one non-negotiable rule for retiring on dividends that filters out dividend traps before they blow up your income, and it's more critical today than it has ever been.

A million dollars sounds like the finish line. For dividend investors in 2026, it is the starting point for a specific question: how much income does it generate, and is that enough to live on?

Value, dividends, small-cap, international, and defensive stocks have all beaten the S&P 500 by a wide margin this year. Given how long they've been out of favor prior to 2026, an extended stretch of outperformance here seems more than likely.

The SCHD ETF returned more than 200% in the last decade. The fund includes stocks from 100 U.S.-based companies with a strong history of dividend performance.

Volatility rising amid Middle East tensions? These 5 dividend ETFs under $50 offer steady income, diversification, and a defensive edge in uncertain markets.

Stocks that pay generous dividends should help investors stay calm—no matter what the world throws at them this year.

The 4-Factor Dividend Growth Strategy outperformed SCHD with a 12.48% annualized return versus SCHD's 10.79% since inception. This rules-based approach selects 20 stocks monthly using free cash flow to debt, dividend growth, ROIC, and forward yield, emphasizing growth and quality. Recent tests adding an expected rate of return filter have underperformed the original strategy, especially during the 2026 value rotation.