SCHD is a High Dividend ETF that seeks to track the Dow Jones Dividend 100 Index.

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What You Need to Know About SCHD:

Annual Reconstitution: Every March, SCHD undergoes a reconstitution, affecting its stock holdings. This year, 23 companies were removed and replaced, signaling a shift towards dividend safety over growth. This strategic move is essential for investors seeking reliable income streams.
Dividend Performance: SCHD recently paid out $0.74 per share, translating into significant returns for investors with substantial holdings. This emphasizes the ETF's ability to provide consistent cash flow to its investors.
The Shift in Strategy: The 2024 reconstitution highlights a focus on dividend safety. By removing highgrowth but loweryield stocks like Broadcom and adding more stable, higheryielding companies, SCHD aims to offer a more dependable dividend income.

Broadcom's Removal: Despite Broadcom's impressive growth, its lower dividend yield of 1.7% made it less aligned with SCHD's focus on dividend reliability. This strategic decision underscores the ETF's commitment to longterm income stability over shortterm gains.

Dividend Yield Increase: The recent changes are expected to increase SCHD's overall dividend yield to 3.87%, an attractive prospect for dividend investors focused on longterm wealth building and financial independence.
The Importance of Diversification: While growth stocks offer potential for high returns, they also come with risks, especially in fluctuating interest rate environments. SCHD's strategy of focusing on stable dividend payers offers a balanced approach, providing both income and a measure of safety against market volatility.

Investment Strategy Insights:

Building Financial Independence: SCHD can play a crucial role in achieving financial freedom, offering a blend of growth and income. Its focus on dividend safety makes it an appealing option for those prioritizing consistent income.

Portfolio Diversification: The addition of new companies to SCHD's holdings reflects a deliberate strategy to enhance portfolio diversity and resilience. This ensures investors are wellpositioned to benefit from various market conditions.

Understanding SCHD's Holdings: Keeping track of SCHD's top holdings and their performance is vital. Regular updates and analysis can help investors make informed decisions about their investments.
Final Thoughts:

SCHD represents a strategic choice for investors seeking a balance between income and growth. Its annual reconstitution ensures the ETF remains aligned with the evolving market conditions, prioritizing dividend safety and longterm stability.
Whether you're aiming for financial independence or seeking a reliable income stream, SCHD offers a compelling option. Its focus on dividendpaying stocks within a diversified portfolio framework positions it as a wise choice for prudent investors.
Dive Deeper into Your Financial Future: If you're looking to build a robust, incomegenerating portfolio, understanding the nuances of SCHD's strategy and holdings is crucial. Consider how this ETF aligns with your financial goals and whether it can contribute to your vision of financial independence.

*Disclaimer: Bob is not a financial advisor. Please contact a professional financial advisor prior to making any decisions. Some of the links and other products that appear on this video are from companies in which Bob Sharpe earns an affiliate commission or referral bonus. Bob Sharpe is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.