SCHD's 3% yield and 232% 10-year cumulative return prove that dividend quality consistently outperforms funds chasing yields in the 8 to 10 percent range. High yields frequently signal falling share prices or unsustainable payouts, not opportunity, making dividend growth a more reliable long-term wealth builder. SCHD's 0.06% expense ratio is one of the lowest in the industry, letting investors keep nearly all returns while compounding grows income over decades.
Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now. New dividend investors often start with the wrong question: Which ETF pays the highest yield?
That mindset can lead them toward funds yielding 8%, 10%, or even more. The problem is that the highest yield rarely translates into the highest long-term wealth. Dividend Equity ETF (NYSEARCA:SCHD) has built a loyal following by taking the opposite approach.
Rather than chasing the biggest payouts, SCHD focuses on high-quality companies with strong balance sheets, consistent profitability, and a history of growing their dividends. Its yield typically lands around 3% to 4%, but that has been enough to produce one of the strongest long-term track records among dividend ETFs. The biggest mistake new dividend investors make is confusing income today with wealth tomorrow.
SCHD demonstrates why those two goals are not always the same. A high dividend yield often looks attractive on paper. Receiving 8% or 10% annually sounds far more compelling than collecting 3.5%.
However, yields frequently rise because share prices have fallen. In many cases, the market is signaling deteriorating fundamentals, slower earnings growth, or an unsustainable dividend. Some funds also generate headline yields by selling covered calls, returning investors' own capital, or investing in riskier sectors that experience greater volatility.
Extract — continue reading at the source.
