The Schwab U.S. Dividend Equity ETF (SCHD) is trading near $34 with a year-to-date return of 29.29%, more than double the S&P 500's roughly 11% gain over the same period. A March 2026 index refresh and a broad rotation away from megacap tech stocks are behind the fund's best year since its 2011 launch.
SCHD is having its strongest year on record. The fund now trades at roughly $34 and has returned 29.29% year to date.
A double-digit lead over the S&P 500
The fund's one-year return stands at 29.53%, compared with five-year and ten-year annualized returns of 10.01% and 13.17%. The S&P 500, by contrast, has a year-to-date return of roughly 11%, leaving SCHD with a double-digit lead. Between 2021 and 2025, the fund produced steady but unremarkable returns that trailed the megacap tech surge. That gap has now closed.
Why the fund turned around
Several forces are driving the shift. Investors tired of paying high prices for AI and megacap tech stocks are moving into cheaper, less volatile dividend payers, a trend reinforced by geopolitical instability and tariffs pushing money toward safer holdings. SCHD's underweight position in the largest tech names also meant it wasn't hurt when that sector cooled this year.
A March 2026 refresh of the fund's underlying index added large, high-quality dividend names including UnitedHealth, Procter & Gamble, and Accenture to a roster that already held Qualcomm and Texas Instruments. Those additions helped lift returns further. SCHD's top holdings now include Abbott Labs, Amgen, ConocoPhillips, Chevron, and Home Depot, spreading exposure across sectors so the fund isn't dependent on any single industry's performance.
What's behind the appeal
SCHD's combination of strong returns, a healthy dividend yield, and low fees has made it a standout in a year when the market has favored solid, dividend-paying companies over growth names.
Source: The Motley Fool
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