Schwab U.S. Dividend Equity ETF
The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100™ Index.
The index is designed to measure the performance of high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios.
Highlights:
Fund started 10/20/2011
Expense Ratio: 0.06%
Current Yield: 2.86%
Current P/E: 16.80x
Payment Dates: March, June, September, December
Dividend Growth:
3-yr – 17.40%
5-yr – 14.55%
Valuation:
Historical P/E: ~19x (fund is currently undervalued using this metric)
10 year average yield: 3.12% (fund is currently slightly overvalued using this metric)
S&P 500 Current P/E: 28.92x
S&P 500 current yield: 1.30%
Investments held in the fund:
105 holdings
Top 10 are 41.36% of the fund
THE HOME DEPOT INC.
PFIZER INC.
BROADCOM INC
PEPSICO INC
TEXAS INSTRUMENTS INCORPORATED
MERCK & CO. INC
BLACKROCK INC.
CISCO SYSTEMS INC.
THE COCA-COLA COMPANY
VERIZON COMMUNICATIONS INC.
Sectors Weight
Financials 22.40%
Technology 20.69%
Consumer Non-Cyclicals 13.93%
Industrials 13.63%
Healthcare 12.16%
Consumer Cyclicals 6.62%
Telecommunications Services 5.09%
Basic Materials 3.58%
Energy 1.90%
Returns:
1-yr – 44.09%
3-yr – 19.78%
5-yr – 16.87%
Since inception – 15.35%
Commentary:
This ETF is by far one of the best balanced dividend focused ETF out there. Their historical price returns matching the S&P500 and offering a yield that is two times higher provides dividend investors a best in class option.
The concentration of the ETF, at around 100 holdings, doesn’t give the same diversification as some of the other ETFs out there, but their long term performance is hard to beat.
They are heavy in Financials and Technology, at 22.4% and 20.69% respectively, could be a risk if those sectors become out of favor moving forward.
The current valuation is mixed between slightly overpriced and underpriced depending on the metrics but the quality of the names and historical returns means that you can feel comfortable averaging into this position over time and not worry about your investment in the long term.
The top holdings lean towards high current yield and include solid, blue-chip names that should appeal to most dividend growth investors. This is a very solid fund and a great choice for the base of your dividend growth portfolio.