Tell me about SCHD and it's total return.

[Time2]

I read this morning about SCHD producing 12% over a fairly long term.
I look and see the dividend is ~ 3.50%. So does it return capital gains or just what is producing the higher return I'm reading.
https://www.schwabassetmanagement.com/products/schd

 

[Exchme]

Yes, Total Return is the sum of dividends and share price appreciation. SCHD started in 2011 and has had slightly worse total return than either the S&P 500 or Total Market funds. Its worst drawdown is slightly less severe than either of those. Depending on your tax bracket, it can be less tax efficient than the broad index funds. Fund expenses are 0.06%, not much more than S&P 500 or Total Market funds.

So it's been a decent stock fund, but not outstanding. Since it is excluding high growth, low or and non dividend paying stocks, it won't be as diversified as the broadest index funds.

Some people like high dividend funds for the simplicity of not having to select something to sell when they need money, but make sure you understand that does not change the risk profile much, this a stock fund that in recessions can have deep drawdowns and reduced dividends, it is not bonds.

 

[COcheesehead]

I held it for income and when individual bonds started yielding far better, I ditched it. The recent returns tell the story of it vs current bond yields. An easy 5%-6% return in bonds vs SCHDs 4% loss with the bond yield being able to be locked in for years.

 

[JackJester]

When I opened up my Schwab after tax account 10 years ago while I was working I thought SCHD was the way to go. I put most of my stock investments into it since I had read about how one can live of off dividends and they are tax friendly.... Investopedia: "The tax rate is 0% on qualified dividends if your taxable income is less than $41,675 for singles and $83,350 for joint married filers". Being retired I thought I would be not much over $84K...yea tax free $$. I reinvested all my divis. And I did a similar AA when I rolled my various 401Ks to a Schwab IRA. Then I learned a lot from this forum about how Total return is what really matters over the long haul when in retirement, especially when you need to be either doing Roth Conversions or actually drawing living expenses from the IRA (i.e., mostly LTCG). So I started putting most of my stock allocation in SCHG the last 5 yearsish. Overall it performs better as shown on the 10 year chart below. I have not bothered to do detailed calculations and tax estimates to justify my decisions mind you.. I have a life to live. I am 1+ yrs into retirement at age 56. I haven't really figured out all the tax issues yet since I'm not getting a W2 anymore; the next 2 years will clarify things for me

 

[Al18]

Over the last 2 years, SCHD is down. The record high interest rates are the primary cause. SCHD is still a good fund, and provides diversification away from the SP500. None of the top 10 holdings (representing 40% of SCHD) are in the top 10 of the SP500.

 

[alaska55]

What 2 years are you talking about because PORTFOLIO VISUALIZER shows both down with SCHG slightly down more in 2 years.

 

[freedom2022]

Is VYM better than SCHD?
VYM is also a high dividend yield ETF.

 

[target2019]

I read this morning about SCHD producing 12% over a fairly long term.
I look and see the dividend is ~ 3.50%. So does it return capital gains or just what is producing the higher return I'm reading.
https://www.schwabassetmanagement.com/products/schd

I question that 12% figure. SCHD has a history just back to Dec 2011. The index it follows is:

Bloomberg Ticker : DJUSDIV
The Dow Jones U.S. Dividend 100 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.

https://www.spglobal.com/spdji/en/i...ors/dow-jones-us-dividend-100-index/#overview

Launched Aug 31, 2011, so historical data beyond that would have to be synthesized from other data.

The methodology is in this document: https://www.spglobal.com/spdji/en/documents/methodologies/methodology-dj-dividend-indices.pdf

Capital Gains return is minimal (if at all).

The average dividend yield is about 3%. Right now you're seeing 3.7% (in Yahoo) and that is due to NAV trending down since FED rate cuts began 2022.

If you look at the top 10 holdings you see what is driving the passive index at this time.

We use this to automatically generate a given amount of equity income in an after-tax account.

What wil it return in the future? I really can't say. But you will see the dividend rate decrease as the NAV increases.

There have been many articles written about SCHD in comparison with other dividend funds. Some may be helpful.

 

[ERD50]

I question that 12% figure. SCHD has a history just back to Dec 2011. ....

What's the question? It looks accurate from what I can see:

https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=3WTTfYdOD7hNCmxuCmkOzt

Portfolio Initial Balance Final Balance CAGR
schd $10,000 $40,012 12.34%
vti $10,000 $41,154 12.61%

Total return slightly below VTI, with slightly lower volatility. FYI, I'm not a fan of sectors (and div payers are a sector), but the numbers are the numbers.

-ERD50

 

[Time2]

Thanks all, I got the info I wanted. I did have a misunderstanding about what SCHD is and was corrected. I hold VTI and VOO, don't expect any changes.

 

[dobig]

Just started investing in SCHD this year and plan on long term hold. Dividend has grown from $0.90 in 2012 to $2.65 and I also get capital growth.

 

[teej1985]

Is VYM better than SCHD?
VYM is also a high dividend yield ETF.

SCHD is like a mix between VYM and VIG.

 

[target2019]

SCHD is not a mix of VYM and VIG. The indices used are different. Here is a simple comparison from 2 years ago. You can follow the short video and find where the data came from, and then do your own comparison.

Source: https://youtu.be/_fDiegrDrcI?feature=shared

You might also add VTI total stock market to the comparison. Another factor is the asset allocation within each ETF. There are differences as well as similarities.