Schwab US Dividend Equity ETF

SCHD

Market cap $70B

I added Ares Capital and Chevron to the Dividend Income Accelerator Portfolio, boosting Dividend Yield and reducing portfolio volatility. Ares Capital offers a Dividend Yield [FWD] of 10.05% and modest dividend growth potential, enhancing income generation and stability. Chevron, now a core position, provides a 4.46% yield, solid financial health, and supports both income and dividend growth for the portfolio.

If you're approaching retirement or are already retired, you'd be thinking harder than ever for ways to supplement your income.

Last week's market pullback presents a unique buying opportunity amid tariff-related volatility and strong U.S. economic fundamentals. SCHD offers broad diversification, pro-cyclical exposure, and limited tech sector risk, making it attractive for income and long-term value investors. Compared to VIG, SCHD boasts stronger dividend growth and less tech concentration, positioning SCHD as a potential hedge against a market sell-off.

SCHD's lag to the broader market, returning 0% compared to the S&P 500s 12.40% YTD is not driven by concentration risk of the Mag 7 or the fund's top 10 holdings. The fund's passive overweight allocations to undervalued sectors like consumer staples and energy positions it for a rebound when AI hype simmers down and commodities catch up. My long-term conviction to auto-buying SCHD stems from it's CAGR annual total returns and dividend growth and value tilt in owning strong companies with healthy financials.

Amplify CWP Enhanced Dividend Income ETF (DIVO) offers a tactical covered call strategy, blending high-quality S&P 500 stocks with enhanced income generation. DIVO has outperformed income-focused ETFs like SCHD, VYM, and JEPI in 2025, delivering strong total returns and a 4.59% yield. The ETF is well-positioned for a lower-rate environment, with a portfolio designed for consistent dividend growth and capital appreciation.

The Schwab U.S. Dividend Equity ETF offers strong downside protection, lower volatility, and a 3.79% yield, making it appealing to conservative and income-focused investors. SCHD's index has outperformed the S&P 500 since 1999, largely due to its risk efficiency and resilience during market downturns, not upmarket performance. SCHD is highly tradable, has a low expense ratio (0.06%), and consistently beats inflation and the risk-free rate, making it structurally attractive.

SCHD is an incredibly popular but controversial dividend ETF with $69 billion in assets under management, a 0.06% expense ratio, and an estimated dividend yield hovering around 4%. Despite these attractive features, SCHD has struggled in recent years and has been one of the worst-performing large-cap value funds over the last three years. Readers seeking an explanation can find one by evaluating dozens of fundamental statistics, though unfortunately, they're unavailable using standard ETF screeners.

Those seeking to generate passive income in retirement via holding high-quality portfolios of dividend-paying stocks have a number of excellent options to choose from.

With the market sitting near all-time highs, a lot of investors may be waiting for a pullback before putting money to work, but that's typically a bad idea. J.P. Morgan found that since 1950, the S&P 500 has hit a new high on 7% of all trading days, so it's actually not that uncommon.

SCHD has significantly underperformed recently. However, I think this is a feature, not a bug. I detail why I am more bullish than ever on SCHD.