The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) surged early in 2026 as investors rotated toward value stocks amid uncertainty over AI spending.
With just under $100 billion in net assets, SCHD remains one of the most popular ETFs for investors seeking reliable passive income from dividend-paying equities.
The fund is up 18.1% year to date, comfortably ahead of the S&P 500’s 10.7% gain, but the bulk of those gains came in the first six weeks of the year.
Over the last five months, SCHD has risen only 3.4%, compared to a 10.9% gain for the S&P 500, as megacap tech stocks recaptured investor attention.
A massive rally in semiconductor stocks has been the primary driver of the S&P 500’s recent outperformance, with the iShares Semiconductor ETF up 93% year to date.
Semiconductors now account for roughly 43.5% of the tech sector, giving chip stocks enormous influence over broader market index performance.
SCHD holds two semiconductor stocks, Texas Instruments at a 4% weighting and Qualcomm at a 3.1% weighting, but its overall tech and communications exposure is less than 20%.
By contrast, consumer staples, healthcare, and energy account for 55.1% of SCHD, sectors that have broadly lagged the semiconductor-fueled market rally in recent months.
The fund’s 3.3% yield is more than triple the S&P 500’s current 1% yield, reflecting how heavily growth stocks now dominate the major index.
Unlike covered-call ETFs such as the JPMorgan Equity Premium Income ETF (NYSEMKT: JEPI) and the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ), SCHD does not cap upside potential by selling calls on an underlying index.
Over the last decade, SCHD has produced a total return of 222%, compared to 319% for the S&P 500, with capital gains historically serving as a core driver of overall performance alongside dividends.
No single stock accounts for more than 4.5% of the ETF, providing solid diversification across a broad basket of dividend-paying large-cap companies.
The fund carries an expense ratio of just 0.06%, meaning investors pay only $6 for every $10,000 invested, keeping fees from meaningfully dragging on returns.
For investors focused on capital preservation and passive income rather than pure capital appreciation, SCHD continues to offer a compelling combination of yield, diversification, and uncapped upside potential.
