NYSEARCA:SCHD – Dividend Income At $27.64 In An AI-Heavy Market
SCHD ETF: Price, Yield, Range And Core Profile
The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) trades around $27.64, marginally below the previous close at $27.66, with a daily range of $27.52–$27.70 and a 52-week band between $23.88 and $28.84. Fund size is significant at about $71.99B AUM, which makes SCHD ETF one of the dominant dividend vehicles in the US market. The fund distributes roughly $1.05 per year, translating into a 3.79–3.80% yield, and charges a very low 0.06% expense ratio. Over the last year, total return has been slightly above 4%, with most of that coming from dividends, while the S&P 500 delivered close to +15% price return. At this $27–$28 price zone, SCHD trades near the upper half of its yearly range but far below growth indices in terms of valuation, which is exactly where the relative value argument begins.
How NYSEARCA:SCHD Builds Its Dividend Engine
SCHD ETF tracks a Dow Jones dividend index but adds hard filters on profitability, free cash flow, return on equity and dividend history, and then concentrates into roughly 100 holdings. The fund reconstitutes annually and rebalances quarterly. Its income engine has two parts. First, the underlying companies grow earnings and dividends, increasing the cash paid to investors. Second, the index methodology systematically sells appreciated, lower-yield positions and rotates into higher-yield names, which historically boosted the distribution growth rate. In the broad bull market from 2011–2021, that recycling effect was a powerful tailwind and helped deliver double-digit dividend growth. In the current regime, where performance is dominated by a narrow group of AI leaders, that same mechanism has become far less effective and, in the last two years, has actively hurt performance.
Reconstitution Errors: From AVGO And BLK To Defensive Laggards
The March 2024 reshuffle was the first clear break point. Around that date, NYSEARCA:SCHD sold an almost 5% position in Broadcom (AVGO), a core AI infrastructure winner, and redeployed capital into stocks such as Bristol-Myers (BMY) and Hershey (HSY) that remained largely range-bound afterwards. Post-sale, AVGO almost tripled, while the new basket barely moved. The methodology did exactly what it is designed to do: exit a now low-yielding high-flyer and buy higher-yield, weaker-momentum stocks. In a broad uptrend, this is a compounding machine. In an AI-concentrated market, it became a drag. The March 2025 reconstitution repeated the pattern. SCHD ETF cut winners such as BlackRock (BLK) and added more exposure to defensives and cyclicals including Merck (MRK), Target (TGT) and several energy names. The net result was a portfolio tilted toward high-quality but out-of-favor sectors while the AI complex continued to drive index-level gains.
Sector Tilt: Energy Overweight At Nearly 20% Of SCHD
After the 2025 rebalance, energy became the largest sector in NYSEARCA:SCHD, with a weight of a bit above 20%, led by holdings such as Chevron (CVX) and ConocoPhillips (COP). That shift aligned SCHD with a value and cash-flow thesis on oil and gas at exactly the moment sentiment rolled over. Soon after the reconstitution, Trump’s “Liberation Day” tariff messaging hit global risk assets and smashed energy sentiment, even as operational metrics stayed resilient. Despite weak spot oil prices, XLE still posted roughly +8% on a one-year basis and sector forward earnings remain well above pre-COVID levels. Morningstar-style fair-value work places energy at roughly 10% undervalued. The market narrative is currently dominated by oversupply fears and weak crude, but balance-sheet and cash-flow data do not support a collapse thesis. For SCHD ETF, this means energy is a performance headwind right now but also a lever: if supply concerns ease and crude stabilizes or recovers into 2026, that 20%+ allocation can flip from handicap to catalyst very quickly.
Healthcare And Staples: Cash-Rich Defensive Core Above 30%
While the sector timing has been painful, the quality of the book is not the problem. Healthcare represents more than 16% of SCHD ETF, with core positions such as MRK, BMY, ABBV and AMGN. These companies generate 30%+ free-cash-flow margins, carry strong balance sheets and run aggressive capital-return programs via dividends and buybacks. The XLV sector ETF is approaching all-time highs again after a period dominated by fear around drug pricing, Medicare negotiations, patent cliffs and tariff noise. That rebound shows the pessimism was overdone. Consumer staples are another pillar: names such as Coca-Cola (KO) and PepsiCo (PEP) trade at low-20s P/E, with modest revenue growth around 0.5–3% but earnings rising more than 20% thanks to pricing power and cost control. Combined, staples plus pharma provide a defensive core comfortably above 30% of the portfolio, giving SCHD a shock-absorber in any downturn where AI multiples compress or earnings expectations reset.
Valuation Gap: SCHD ETF Versus SPY At Current Prices
On valuation, NYSEARCA:SCHD is clearly cheaper than the broad US market. One dataset puts SCHD around 17.55x trailing earnings, 9.27x price-to-cash-flow and 3.02x price-to-book, with a PEG ratio near 0.83, which is below the classic “1.0” threshold for attractive growth-adjusted pricing. Another forward-looking read shows roughly 13.5x forward earnings for SCHD versus about 22x forward P/E for the S&P 500 and close to 31x trailing for SPY. Income is where the spread is most obvious: SCHD ETF yields about 3.79–3.80% at $27.64, while the S&P 500 yields roughly 1.07%. Volatility also favors SCHD, with historical annualized volatility around 15.99% compared with 19.5% for SPY. In practical terms, investors are paying about half the earnings multiple, receiving over three times the cash yield, and accepting lower volatility, in exchange for being structurally underweight the AI leaders that have carried headline indices.
Dividend Growth Slowdown: From Double Digit To Mid Single Digit
The cost of that positioning shows up in the dividend growth trajectory. Historical double-digit growth for SCHD ETF was driven by both organic dividend hikes and the recycling mechanism that harvested gains from strongly appreciated, low-yield stocks and redeployed into discounted high-yielders during a multi-sector bull phase. As the market narrowed after late 2022 and performance concentrated in a small cluster of AI names, that second engine has delivered far less incremental benefit. The last two reconstitutions, which pushed SCHD out of AVGO and BLK and heavier into energy, healthcare and staples, further slowed dividend acceleration. The realistic scenario near $27–$28 is that distribution growth moderates toward mid-single digits until either there is a broad rotation into value and income sectors or a multi-sector bull market resumes, creating fresh opportunities for profitable recycling.
Macro Context: SCHD Versus Treasuries And An Overpriced Index
From a macro allocation view, the trade-off is between equity income with upside and fixed income with capped return. Short-dated US Treasuries up to two years yield around or below 3.48%, with the 30-year near 4.8%. At $27.64, SCHD ETF’s 3.8% yield already beats the short end and comes with embedded optionality: if dividend growth resumes and valuations re-rate, total return can materially exceed coupon-like bond returns. Over the past decade, SCHD’s roughly +195% total return lagged the S&P 500’s +290%, but that index outperformance was bought at a higher valuation and volatility, and today the S&P 500 trades at historically stretched multiples with record concentration in a narrow AI complex. If AI capex monetization underdelivers or the market starts to price more realistic growth trajectories, the flows that chased high-multiple growth can rotate back into cash-flow-rich, lower-multiple, higher-yield equity factors like SCHD.
NYSEARCA:SCHD At $27.64 – Strategic Verdict: Buy
Putting the numbers together – price at $27.64, 52-week range $23.88–$28.84, AUM $71.99B, yield 3.79–3.80%, annual payout $1.05, expense ratio 0.06%, P/E in the mid-teens versus ~22x for SPX, structurally high exposure to energy and healthcare, and documented underperformance driven by reconstitution timing rather than balance-sheet damage – the risk/reward profile is clear. SCHD ETF gives investors a diversified portfolio of cash-generative, dividend-paying US equities, at a material discount to the S&P 500 and with a cash yield more than triple the index, in exchange for sacrificing short-term upside tied to concentrated AI leaders. At these levels and under these conditions, NYSEARCA:SCHD is a Buy, positioned as a core equity income holding for investors who want to be paid around 3.8% in cash while waiting for the next rotation away from an over-owned, high-multiple growth complex and back toward dividend discipline and fundamental cash flow.
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