Investing a hundred dollars at this moment, this notable Dividend ETF is an intelligent acquisition opportunity.
Investing in dividend stocks can yield excellent long-term returns. For instance, an investor who put $100 into average dividend stocks back in 1973 would have seen that money balloon to over $8,700 by the end of 2023, according to research from Hartford Funds and Ned Davis Research. That's ten times more than if they invested in non-dividend payers during the same period (around $850). And if they bet on companies that consistently increased their dividends, they'd be looking at an even bigger payday ($14,100).
Dividend growers are a no-brainer investment due to their historically superior returns. Investing in these top performers is as easy as buying shares in an exchange-traded fund (ETF) that focuses on them, like the Schwab U.S. Dividend Equity ETF (SCHD).
Embracing Top Dividend Stocks
The Schwab U.S. Dividend Equity ETF follows a straightforward strategy: track the Dow Jones U.S. Dividend 100 index. This index selects 100 high-dividend-yielding stocks with a strong financial standing, focusing on those with a history of consistent payouts and growth.
One of the ETF's top holdings is Pfizer, accounting for 4.3% of its net assets. Pfizer has an unbroken dividend-paying streak of 345 quarters, most recently increasing its dividend in December, extending its streak of dividend hikes to over sixteen years. The global pharmaceutical giant also boasts a hefty dividend yield exceeding 6.5%.
Coca-Cola is another prominent holding, comprising 4.1% of the ETF's assets. Delivering its 62nd consecutive annual dividend increase last year, Coca-Cola remains a Dividend King – a group of companies with uninterrupted payout-hiking streaks of 50 years or more. Its dividend yield stands at 3.1%.
A Steady Wealth Producer
Over the years, the Schwab U.S. Dividend Equity ETF's focus on dividend growth stocks has paid off for its investors. Since its inception in 2011, the ETF has delivered a 12.9% annualized total return, growing a $100 investment to over $500. Over the past five and ten-year periods, it's reported annualized returns of slightly over 11%. These returns easily surpass the average dividend growth stock's 10.2% annualized return during the past 50 years, according to Ned Davis Research and Hartford Funds data.
The ETF currently offers an attractive income stream, boasting a 3.6% dividend yield based on the last 12 months' distributions. This means a $100 investment would yield $3.60 in dividend income yearly, with this income stream expected to grow as the ETF's holdings increase their dividends. For maximum returns, consider reinvesting dividends into additional shares of the ETF, accelerating the growth of your income stream and capital. When the time comes to cover retirement expenses with dividend payouts, simply turn off the auto-reinvestment feature.
A Top-Performing Dividend ETF
With a portfolio of 100 high-yielding dividend stocks, the Schwab U.S. Dividend Equity ETF is well-positioned for strong returns in the long term. Given the historical outperformance of dividend stocks, this focus is likely to pay off for investors. This potential makes the ETF an appealing choice for those looking to invest their spare cash for long-term gains.
[1] Source: Yahoo Finance[2] Source: Seeking Alpha[3] Top 10 Holdings of Schwab U.S. Dividend Equity ETF (SCHD) as of Mar 21, 2023.[4] As of Feb 15, 2023. S&P 500's yield source: FactSet.
Investing in the Schwab U.S. Dividend Equity ETF, which focuses on high-dividend-yielding stocks with a history of consistent payouts and growth, can provide a steady income stream and potentially high returns. To maximize returns, consider reinvesting dividends into additional shares. (finance, investing, money)
During the past five and ten-year periods, the Schwab U.S. Dividend Equity ETF has delivered impressive annualized returns, surpassing the average dividend growth stock's return over the past 50 years. This performance underscores the ETF's potential as a long-term investment option for yield-seeking investors. (finance, money, investing)
