The Schwab US Dividend Equity ETF (SCHD) has crawled back after bottoming at $23.90 on April 9 this year. It has jumped to $27, its highest point since April 3, mirroring the performance of the broader stock market. This article explores whether SCHD is a good ETF to buy this year.
SCHD is a popular dividend ETF
The Schwab US Dividend Equity ETF is one of the biggest dividend funds in the United States, with over $70 billion in net assets and an expense ratio of 0.06%.
The fund tracks the Dow Jones US Dividend 100 Index, which comprises of 100 companies that have demonstrated years of dividend growth.
Its constituents are large players across all sector,s excluding real estate. Most of the companies are in the energy segment, followed by consumer staples, healthcare, industrials, financials, and information technology.
ConocoPhillips, a top player in the oil and gas industry, is the biggest constituent in the fund. It is followed by companies like Coca-Cola, Texas Instruments, Cisco Systems, Verizon, and Altria. Its other top constituents are companies like Lockheed Martin, Chevron, and Home Depot.
The SCHD ETF is loved because of its high dividend and track record of dividend growth. Its trailing twelve-month dividend yield is 3.86%, while its dividend growth rate in the same period was 16.6%.
SCHD ETF had a compounded annual growth rate of 11.30% in the last ten years, beating other popular dividend ETFs like Vanguard High Dividend Yield Index Fund ETF Shares (VYM), iShares Core Dividend Growth ETF (DGRO), and Vanguard Dividend Appreciation Index Fund ETF Shares (VIG).
SCHD’s dividend yield of 3.8% is lower than the ten-year government bond yield of 4.43%, while the 30-year and the 2-year yield 4.9% and 3.97%, respectively.
Potential catalysts for the Schwab US Dividend Equity ETF
The Schwab US Dividend Equity ETF will have several potential catalysts in the coming weeks.
First, the fund will react to the ongoing Iran and Israel conflict that has pushed crude oil prices higher. Higher oil and gas prices will benefit the fund because most of its constituents are in the energy sector.
ConocoPhilips stock jumped by over 2.4% on Friday, while Chevron jumped by 0.65%. Other energy companies like EOG Resources, Schlumberger, and Valero Energy also rallied.
Second, the SCHD ETF stock will react to the upcoming Federal Reserve interest rate decision. Analysts anticipate that the Fed to maintain rates unchanged between 4.25% and 4.50%. A hawkish Fed will likely hit the fund.
Further, the ETF will react to the upcoming G7 meeting in which Trump may talk with other leaders and reach trade agreements.
SCHD ETF stock price analysis
The daily chart shows that the Schwab US Dividend Equity ETF has been in a strong bullish trend in the past few weeks. It moved from a low of $23.90 on April 10 to $27, its highest point since April 3.
The stock moved above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bulls are in control.
Further, the Relative Strength Index (RSI) and the MACD indicators have continued rising.
Therefore, the stock will likely continue rising as buyers target the key resistance point at $29.20, its highest point in November last year. This price action would imply a 8.20% increase from the current level.
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