SCHD: My Disappointment Is Immeasurable

Summary

  • Schwab U.S. Dividend Equity ETF consistently underperforms major indices, offering disappointing total returns even during volatile or weak market periods.
  • The ETF’s yield, while higher than the S&P 500, is not compelling enough given tax considerations and alternatives like REITs or custom stock portfolios.
  • A carefully selected portfolio of high-yield stocks has outperformed SCHD in both yield and total return, despite less diversification.
  • Given chronic underperformance and limited yield advantage, I maintain a 'sell' rating on SCHD for most investors.
  • Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Learn More »
Senior male sitting on his bed - negative emotion

Justin Paget

One investment opportunity that continues to surprise me, in a negative way, is the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD). Investors like this ETF because of the yield that it offers. I can definitely understand some market participants, particularly those

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This article was written by

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Daniel is an avid and active professional investor.

He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein. Learn more.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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