Schwab’s Top Dividend ETF Leverages Energy Stocks for High-Yield Payouts

The Schwab U.S. Dividend Equity ETF (SCHD) distinguishes itself in the dividend-focused ETF space by offering exposure to 100 high-quality, high-yielding stocks at a minimal cost. With an expense ratio of just 0.06%, it provides investors a cost-efficient avenue for steady, growing dividend income.

Energy stocks play a pivotal role in driving the fund's dividends. The ETF, tracking the Dow Jones U.S. Dividend 100 Index, prioritizes financial strength and dividend reliability through metrics like cash FLOW to debt, return on equity, and five-year dividend growth. Its recent reconstitution in March added 22 stocks, including five from the energy sector, reinforcing the sector's influence.

The fund's holdings boast an average dividend yield of 3.8%, with dividends growing at an 8.4% annual rate over the past five years. This strategic focus on energy underscores the sector's capacity to fuel robust payouts, even as the fund maintains broad sector diversification.