Posted by Back in June 2024 I decided to invest in SCHD (Schwab US Dividend Equity ETF). I had heard a lot of good things about the ETF and they had just announced a 3 for 1 stock split scheduled for November. At the time, the price was $78.21 per share. I initially bought 100 shares and then added another 100 prior to the split. After the split, I had 600 shares. I then added another 100 shares a few months after the split for a total of 700 shares. Since then, I have been reinvesting dividends each quarter. So far, dividends have added an additional 39 shares.
My SCHD dividends average about $230 per quarter, or $76.67 per month. The dividend rate is currently 3.04%. Not great compared to some bond ETF’s which are close to 5%. But, as bond rates rise, the value of each share goes down. With SCHD, the dividend is steady and the share price has risen by over 40% in the past 2 years. I may only be getting $960 in annual dividends, but the 24-month share price improvement added $7860 in value. Right now, 739 shares of SCHD represents only 3.87% of my tax deferred retirement account.
All my dividends are reinvested without a tax penalty. SCHD’s payouts qualify for lower long-term capital gains tax rates, so it would also work in a taxable account. I just wanted to add my experience with SCHD because of all the fans of it on YouTube. It’s not a get rich quick investment. It is a slow growth process. I delayed investing in SCHD because there was never a good buying opportunity. That is until the stock split came along. With the current price at $35 per share, it may be a while before we see another stock split. My best advice would be to set an entry price and wait for a market correction. With SCHD there are rarely big price drops, so the earlier you establish a position, the better.