Is SCHD Still the Best Dividend ETF You Can Buy for Passive Income? Here's What the Data Says.

Is SCHD Still the Best Dividend ETF You Can Buy for Passive Income?

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) has become the default pick for many income investors seeking a reliable source of passive income. With its attractive dividend yield and steady growth, the fund has consistently delivered on its promise of providing investors with a stable stream of income. But is SCHD still the best dividend ETF you can buy for passive income? Let's take a closer look at the data to find out.

Dividend Yield: SCHD Takes the Lead

One of the key factors that income investors look for in a dividend ETF is a high dividend yield. The Schwab U.S. Dividend Equity ETF handily beats its top rivals on this front, with a current yield of 3.1%. This is significantly higher than the 2.2% yield for the Vanguard High Dividend Yield ETF (NYSEMKT: VYM), the 1.9% yield for the iShares Core Dividend Growth ETF (NYSEMKT: DGRO), and the 1.5% yield for the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG).

Dividend Growth: SCHD Shines Bright

While dividend yield is an important consideration for income investors, it's not the only factor to consider. Dividend growth is also crucial, as it indicates whether the fund's dividend payments will continue to increase over time. The Schwab U.S. Dividend Equity ETF fares well in this category, too, with its dividend having increased by roughly 210% over the last five years. This level of growth is significantly higher than the dividend growth for the iShares Core Dividend Growth ETF and both of Vanguard's top dividend ETFs during the same period.

Cost: SCHD's Expense Ratio

While the Schwab U.S. Dividend Equity ETF excels in terms of dividend yield and growth, it doesn't quite come out on top in terms of cost. Its annual expense ratio of 0.06% is slightly higher than the 0.04% ratio for the two Vanguard dividend ETFs. However, it's worth noting that the expense ratio is still relatively low, and the fund's overall performance makes up for the slightly higher cost.

Total Return: SCHD's Performance Over Time

When it comes to total return, the Schwab U.S. Dividend Equity ETF doesn't quite come out on top. The iShares Core Dividend Growth ETF generated a total return of 254% over the last 10 years, compared to around 244% for the Schwab U.S. Dividend Equity ETF. However, it's worth noting that the fund's total return isn't much lower than that of the iShares Core Dividend Growth ETF over the period.

What to Watch Next

So, is SCHD still the best dividend ETF you can buy for passive income? The data suggests that it's still a strong contender, with its attractive dividend yield and steady growth making it an attractive option for income investors. However, it's worth keeping an eye on the fund's performance over time, as well as its expense ratio, to ensure that it continues to meet your investment goals.

Conclusion

In conclusion, the Schwab U.S. Dividend Equity ETF remains a top choice for income investors seeking a reliable source of passive income. With its attractive dividend yield and steady growth, the fund has consistently delivered on its promise of providing investors with a stable stream of income. While it may not come out on top in terms of total return, its overall performance makes up for the slightly higher cost. As always, it's essential to do your own research and consider your individual investment goals before making any investment decisions.