The Schwab U.S. Dividend Equity ETF (SCHD) is a notable investment vehicle, boasting nearly $70 billion in net assets and a dividend yield of 3.9%, significantly surpassing the S&P 500’s 1.2% yield. This ETF particularly focuses on established blue-chip stocks, with top holdings that include Chevron, ConocoPhillips, PepsiCo, Merck, and Amgen, reflecting its strategy of investing in companies known for their reliable dividends.
However, while SCHD is a robust selection, there are individual stocks that show potential for greater returns. Among them, Philip Morris International (PM) stands out due to its significant growth in next-generation smoke-free products. With these products generating 41% of its revenue and a 15.2% increase in revenues from them, Philip Morris’s shift towards innovation appears promising. The company’s reported revenue reached $10.1 billion in the second quarter, alongside a 14.9% rise in operating income, indicating strong financial health. Its current dividend yield stands at 3.4%, combined with a legacy of consistent dividend growth.
Another noteworthy pick is Dominion Energy (D), which offers a higher dividend yield of 4.5%. Positioned in Virginia’s burgeoning data center market, Dominion has experienced a revenue rise of 12% to $4.08 billion in its first-quarter earnings. Its earnings per share (EPS) surged by 50% to $0.75, showcasing its robust performance. Management projects an EPS of between $3.28 and $3.52 for the year, signifying a 23% increase. Furthermore, Dominion’s stability as a utility stock, coupled with the potential for growth from the AI-driven demand for electricity, makes it a compelling choice for investors seeking both income and growth.
Investors are invited to consider these opportunities while understanding that while SCHD offers great diversification and stability, certain individual stocks like Philip Morris and Dominion Energy may provide higher potential returns. The overall market sentiment remains one of cautious optimism as companies adapt to changing consumer preferences and technological advancements.