NYSEARCA:SCHD Nears $26.23: Will Schwab’s Dividend ETF Drive 4% Yields and Strong Gains in 2025?

SCHD ETF Consolidates Near $26.23 as Income Investors Eye 4% Yield and Defensive Strength

NYSEARCA:SCHD ETF Holds Firm While Broader Markets Flash Overvaluation Signals

The NYSEARCA:SCHD ETF is quietly outperforming expectations as market volatility resurfaces beneath the tech-driven surface of the S&P 500. With the fund last trading around $26.23, SCHD is presenting an increasingly attractive opportunity for income-focused investors seeking both stability and growth. Despite lagging the 12.84% return of the S&P 500 over the past 12 months, SCHD’s 1.59% total return is masking a much stronger income component, driven by a forward dividend yield of approximately 4.02%—currently one of the widest yield gaps versus SPY in a decade. This income differential, combined with SCHD’s 11.3% 10-year dividend CAGR, makes the ETF a key vehicle for those looking to balance yield and defensive positioning.

Sector Allocation Gives NYSEARCA:SCHD ETF a Critical Defensive Edge Amid AI Bubble Risks

As large-cap growth valuations soar on the back of AI euphoria, SCHD’s defensive tilt is giving it a differentiated value profile. The ETF’s largest sector exposures—Consumer Staples (16.77%), Healthcare (16.36%), Energy (14.61%), and Financials (12.64%)—represent a basket designed for downside protection. Technology accounts for just 11.76% of the portfolio, insulating SCHD from concentrated risks now brewing in mega-cap growth names. Recent reports from Current Market Valuation suggest the S&P 500 is trading at multiples well above long-term norms, while the Magnificent 7 continue to distort earnings trends. In this context, SCHD’s diversified approach offers a measured alternative, particularly as over 54% of S&P 500 companies issuing guidance recently lowered their full-year forecasts.

Dividend Yield and Growth Trajectory Reinforce NYSEARCA:SCHD ETF’s Long-Term Income Potential

While SCHD’s current 4.02% yield is already a standout, its underlying dividend growth is where the ETF’s long-term power resides. With a 3-year dividend growth CAGR of 11.26% and 13 consecutive years of dividend increases, SCHD remains one of the most consistent income generators in the ETF universe. The fund’s 5-year weighted average dividend growth CAGR of 7.38% further supports projections that a $75,000 investment today could generate over $10,605 in annual dividends by 2040, and potentially $15,141 by 2045, assuming continued compounding.

Top Holdings in NYSEARCA:SCHD ETF Drive Income and Quality Profile

SCHD’s top 10 holdings, which account for 41.12% of the portfolio, bring together a core of high-quality, income-producing companies. Verizon (VZ) leads with a 4.36% portfolio weight, offering robust yield and steady cash flow. Coca-Cola (KO) at 4.35%, Altria (MO) at 4.31%, and Chevron (CVX) at 4.33% provide exposure to defensive consumer staples and energy income streams. Healthcare exposure via Johnson & Johnson (JNJ) at 3.24% and pharmaceuticals like Pfizer (PFE), currently yielding 7.29%, bolster the fund’s stability even as macroeconomic uncertainty persists.

Valuation and Entry Point for NYSEARCA:SCHD ETF Looks Compelling Below $27

Trading at $26.23, SCHD currently sits in the lower half of its 52-week range, presenting what many investors view as a favorable entry point. The ETF’s valuation remains grounded, with forward price-to-earnings and price-to-sales ratios that reflect its value orientation rather than speculative growth pricing. Compared to peers like HDV and VYM, SCHD offers the best combination of yield and growth, and its 0.06% expense ratio ensures that investor returns are maximized without unnecessary drag from fees.

Broader Macro Backdrop Supports Increased Allocation to NYSEARCA:SCHD ETF

Recent earnings trends across the S&P 500 show that many companies outside the tech leadership cohort are struggling to maintain earnings growth, with FactSet reporting revenue and EPS beats below 5-year averages. Meanwhile, the risk of escalating tariffs and geopolitical tensions adds further justification for a more defensive allocation. SCHD’s limited tech exposure (10%) and diversified sector balance make it an appealing anchor in portfolios that may otherwise be overexposed to momentum-driven growth sectors.

Potential Risks to Monitor for NYSEARCA:SCHD ETF

Investors should remain cognizant of several risks. 19% of SCHD’s holdings are in Energy, meaning oil price volatility can materially impact the fund’s income stream. Recent fluctuations in oil markets have underscored this risk. Additionally, regulatory headwinds in healthcare—specifically potential Medicare price negotiations—could impact top holdings such as Amgen (AMGN). Telecommunications, another key sector for SCHD, faces ongoing competitive pressures that could challenge Verizon’s earnings growth.

Projected Income Growth Highlights Long-Term Value in NYSEARCA:SCHD ETF

Based on SCHD’s current dividend growth trajectory and yield, a $75,000 allocation could reasonably be expected to generate $104,927 in accumulated pre-tax dividends by 2040. This assumes the portfolio’s 7.38% 5-year average dividend growth CAGR continues, which is supported by the robust cash flow profiles of SCHD’s top holdings. Moreover, this income potential comes with significantly less volatility than individual stock picking, thanks to SCHD’s wide sector diversification.

Final Take on NYSEARCA:SCHD ETF Valuation and Portfolio Role

At $26.23, with a 4.02% yield and one of the best dividend growth profiles in the ETF space, NYSEARCA:SCHD remains an exceptionally strong candidate for income and value investors. While short-term performance has lagged the S&P 500 due to the current tech-led rally, SCHD offers superior risk-adjusted income potential and diversification benefits that are likely to shine as broader market volatility resurfaces. With defensive positioning increasingly important in today’s environment, accumulating SCHD below $27 remains a sound strategy for building sustainable income and long-term capital growth.

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