Large-Cap Domestic Dividend ETF: Schwab U.S. Dividend Equity ETF (SCHD)
Although there are many considerations that go into evaluating the true costs of owning dividend ETFs, the management expense ratio is likely the most prominent.
When it comes to large-cap stocks, I like to see really low MERs. After all, liquidity isn’t a problem with any of the holdings so why should costs be an issue? Schwab’s U.S. Dividend Equity ETF (SCHD) charges an annual management fee of 0.07% — three basis points less than the next-most thrifty dividend ETF.
SCHD replicates the performance of the Dow Jones U.S. Dividend 100 Index, which is relatively new index first calculated Aug. 31, 2011. Using four fundamentals (cash flow to total debt, return on equity, dividend yield and five-year dividend growth rate) the index then screens for dividend payment consistency, size and liquidity.
What comes out the other side is a group of 100 large-cap dividend-paying stocks where the top 10 holdings accounting for 42% of its $1.4 billion in total net assets. Lest we forget why we’re here, the 30-day SEC yield is 2.67%.