Key Points
-
The Schwab U.S. Dividend Equity ETF finished Oct. 22 at $35.40, its highest close ever.
-
A rule requiring at least 10 straight years of dividends shuts Amazon, Tesla, Alphabet and Meta Platforms out of the fund’s index.
-
Six stocks that made up around a quarter of the fund in early January have all climbed over a third in 2026.
-
The Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD) finished Thursday, Oct. 22, at $35.40, the highest close in the popular dividend fund’s history. This beat its old record of $35.21 from Aug. 24, and it leaves the fund up around 29% from where it ended 2025.
That same day, the Invesco QQQ Trust (NASDAQ:QQQ) lost about 3%. And as of this writing, the Nasdaq-100 fund has slid around 7% since Oct. 6, but the dividend fund has risen about 8%.
Missed AI’s “Act 1”? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
It did that without the stocks that have led the market for much of the last few years. As of Oct. 13, not one of its 102 holdings belonged to the so-called “Magnificent Seven” — Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms and Tesla.
With dividends, it’s also topped all of those seven stocks in 2026. I think what that mix means for an owner matters more than the record itself.
Image source: Getty Images.
The 10-year rule
The fund tracks the Dow Jones U.S. Dividend 100 Index, which starts with a basic rule. A company needs to have paid dividends for at least 10 years running. Of the stocks that pass, the lower-yielding half is cut. The rest are ranked by a score based on cash flow relative to total debt, return on equity, dividend yield and five-year dividend growth.
The first rule keeps out four of the seven. Amazon and Tesla don’t pay dividends, and Meta and Alphabet just began paying them in 2024.
Apple, Microsoft and Nvidia have longer dividend records, of course. But each yields under 1% as I write. And with yields that low, they probably don’t get past the yield cut.
That leaves the fund leaning elsewhere. As of Sept. 30, consumer staples and healthcare stocks made up around 39% of the fund and energy stocks about 15%. Tech stocks were only about 12%.
A steady core
The index reshuffles once a year, in March, so today’s fund isn’t quite what an owner held in January. But a core of big positions stuck around and they had a huge year.
Texas Instruments (NASDAQ:TXN), ConocoPhillips, Chevron, Merck, Amgen and Coca-Cola together made up about 24% of the fund as of Jan. 7. All six were still among its 10 biggest holdings as of Oct. 13. Texas Instruments, the fund’s largest position, has risen around 61% this year. The two oil producers have gained about 56% and 49%, the two drugmakers about 40% and 37%, and Coca-Cola about 36%.
Notably, Texas Instruments is a chipmaker, so the fund isn’t free of tech — it just holds an older, dividend-paying slice of it.
The fund also leaned more on oil and gas before March. That reshuffle cut its energy weight by around 7 percentage points and added new healthcare holdings like UnitedHealth Group and Abbott Laboratories. Procter & Gamble, now one of the fund’s three largest positions, wasn’t in it in January either.
Meanwhile, the seven stocks the fund doesn’t hold had an uneven year. With dividends, the fund’s 2026 return is around 32%. Apple got closest at about 28%. Microsoft, Nvidia, Alphabet and Amazon have risen between around 4% and 14%, but Meta has dropped about 1% and Tesla about 17%.
What if big tech comes back?
I think an owner learns more from the years when this mix worked against the fund.
In 2023, 2024 and 2025 combined, the dividend fund returned around 22% with dividends, but QQQ returned about 135%.
This gap is the trade-off baked into the fund. With little tech and none of the Magnificent Seven, it can hold up well when those names slide, as the last few weeks show. But when they lead, it can lag far behind.
And this year’s gains arguably lean on stocks that can turn fast. After all, oil producers’ profits tend to rise and fall with oil prices, and a 61% gain in under 10 months is a lot for a mature chipmaker like Texas Instruments.
In the end, I don’t think the record means the fund has changed. It’s doing what its rules ask, holding steady dividend payers instead of the market’s largest growth names. For an owner, this makes it a good counterweight when big tech stumbles. It also means the fund likely won’t keep up the next time those stocks lead.
Should you buy stock in Schwab U.S. Dividend Equity ETF right now?
Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $361,596!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,303,935!*
Now, it’s worth noting Stock Advisor’s total average return is 910% — a market-crushing outperformance compared to 211% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of October 23, 2026.
Daniel Sparks and his clients have positions in Apple. Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Abbott Laboratories, Alphabet, Amazon, Amgen, Apple, Chevron, Merck, Meta Platforms, Microsoft, Nvidia, Tesla, and Texas Instruments. The Motley Fool recommends ConocoPhillips and UnitedHealth Group. The Motley Fool has a disclosure policy.
