The Schwab US Dividend Equity ETF (SCHD) is gaining attention from investors, currently boasting a notable 3.79% dividend yield as market conditions prompt many to seek reliable income sources. Beyond its current yield, forecasts suggest that 2026 could present an exciting opportunity for dividend growth in this ETF.
Currently, SCHD’s attractive yield significantly exceeds the S&P 500’s yield of 1.1%, reflecting its focus on rewarding dividend stocks. The ETF consists of over 100 companies renowned for dividend payments, with an impressive average five-year dividend growth rate of 12%. In 2025, investors received quarterly dividends ranging from $0.25 to $0.28, culminating in an annual total of approximately $1.05.
A review of SCHD’s performance in 2025 reveals it gained only 5.14%, underperforming relative to the surging S&P 500, which was largely bolstered by mega-cap technology stocks that generally do not pay dividends. This underperformance may have established a unique scenario, as analysts believe that as expectations regarding interest rates stabilize, dividend stocks will likely become more appealing to investors.
Following a reconstitution in 2025, SCHD now has its largest sector allocation of 19.3% in Energy, a sector known for its dividend-paying reliability and one that is expected to perform robustly in the coming year.
Analysts anticipate that 2026 could mark a resurgence for dividend stocks in general. Predictions from Morgan Stanley and others point to the fact that while overall equity gains may slow, dividend stocks are expected to attract renewed investment as they promise stability in volatile markets. SCHD’s consistent growth in dividends over the past 14 years supports this optimistic outlook.
For investors, a recovery in SCHD’s performance is not just about potential price growth but also about the advantages of consistent income reinvestment. Assuming a positive trajectory in 2026, investors could enjoy the benefits of both capital appreciation and robust dividends. A decade-ago investment of $10,000 in SCHD would now be valued at approximately $29,009, assuming reinvestment of dividends, showcasing the power of compounded growth.
Looking ahead, SCHD’s next scheduled dividend payment is on January 4, 2026, with distributions set for every quarter throughout the year, promising a steady income stream regardless of fluctuations in the market. With insights suggesting a shift toward dividend-focused investment strategies, SCHD stands to play a pivotal role in many portfolios in the years ahead.