The One Dividend ETF I Would Hold Forever: Why I Choose SCHD
🎯 If You Could Pick Just One Dividend ETF?
Let's say you could pick one dividend ETF to hold forever. Not five, not ten—just one. Which one would it be? Today, I'm going to share the one I would choose and why.
It's not about what's hot this year. It's about what builds wealth over decades. If you want an ETF that consistently pays you dividends, helps protect your money, and gives you peace of mind over the long haul, stick with me.
🐢 SCHD: The Steady Tortoise
My choice is SCHD (Schwab US Dividend Equity ETF).
Let me be honest: SCHD has not been the hottest performer this year. Yes, SCHD is lagging the S&P 500—there's no hiding that. We've had a big tech surge and the charts are all lighting up green. SCHD hasn't been the star.
If you're new to investing, that may feel wrong. You might think, "Doesn't the best dividend ETF beat the market every year?"
But here's the thing: I don't see a one-year lag as a failure. SCHD is like the tortoise in the race—steady and purposeful. Meanwhile, the rabbits hop up and down.
📅 I Invest for 20 Years, Not One
Why doesn't this make me lose sleep at night? Because I don't invest for one year. I invest for 5, 10, 15, 20 years.
Let me be very clear: I don't judge an ETF or stock based on where the chart has gone in any time frame—even 20 years. That's like judging a basketball player on a few plays, a few games, or even one season. You need to look at how they're preparing, what they're doing, how their trend is going. You need to look at the whole picture.
SCHD is built for long-term income and stability, not headlines and quick spikes.
🎢 Emotional Reactions Are Not Investing
I don't jump in and out of investments. I don't trade SCHD because it lags this quarter. I don't panic sell when it doesn't outshine the S&P.
That's not investing. That's emotional reaction.
No matter how smart a decision feels in the moment, reacting that way will rarely work out. SCHD was designed for income and stability, not for fireworks returns in short bursts.
Yes, it's lagging this year. But that doesn't make it bad.
💎 Why SCHD Is Different From Other Dividend ETFs
There are a lot of dividend ETFs out there. Some just chase the highest yield possible. Some include companies that aren't stable.
SCHD is different. Rather than chasing companies based on the highest dividends, SCHD focuses on quality first:
- ✅ Companies with strong cash flow
- ✅ Companies with strong returns on equity
- ✅ Companies with a history of growing dividends
- ✅ Most importantly, companies with good balance sheets
Companies with strong balance sheets can last the test of time. You don't want a company that pays a big dividend right before it collapses. That's like collecting interest from a sinking ship.
SCHD's approach is more like collecting rent from a property that keeps increasing in value, keeps increasing its rents, and keeps widening the gap between income and expenses.
📊 SCHD Quick Facts
| Feature | Details |
|---|---|
| Full Name | Schwab US Dividend Equity ETF |
| Number of Holdings | ~100 dividend-paying companies |
| Annual Dividend Yield | ~4% (paid quarterly) |
| Expense Ratio | 0.06% ($0.60 per year for every $1,000) |
| Top Holdings | Coca-Cola, PepsiCo, Home Depot, Cisco, Amgen |
An ETF means "exchange-traded fund." It's a basket of stocks—a bundle of many companies. When you buy one ETF, you're buying a small piece of many companies all at once.
ETFs are super low-cost, easy to buy through your brokerage, and update automatically in real-time. Unlike mutual funds, you don't need to worry about which stocks to pick, when to sell, or what the fund manager is charging you.
The best part? They tend to outperform those Harvard MBA money managers who charge high fees while underperforming.
🏠 Who Is SCHD Good For?
I use SCHD because I don't need to make a killing. I don't need 15-20% returns.
I already have real estate and businesses that are doing quite well and getting great returns. What's more important for me at this point in my life—financially and personally—is stable capital growth and income from my investments. If I can have both, I'm a happy camper.
That doesn't mean I won't buy QQQ (the tech ETF) at some point. I have 28 individual stocks too. But at the end of the day, my dollar cost averaging goes into SCHD.
SCHD May Be Ideal For:
- 🎯 Those in retirement who need to live off their money
- 🎯 Those who want consistent income with some capital appreciation
- 🎯 Those who prefer lower volatility
SCHD Might Not Be Best For:
- 📈 Young investors with a 20-40 year horizon
- 📈 Those who can handle volatility for higher growth
When I see young people on the internet who love dividends, I think: "Really?" At that age, you have time to take on more risk in growth-heavy ETFs like QQQ.
📈 SCHD vs QQQ vs S&P 500 Comparison
Looking at charts since 2012:
- QQQ has shown the highest returns
- S&P 500 (SPY) has also performed well
- SCHD has lagged behind
Why? The big tech stocks skyrocketed. Those stocks are in QQQ and SPY, but they're not in SCHD.
Here's something fascinating: If you started investing in QQQ at the very peak of the dot-com bubble in March 2000—the exact peak where the market would fall 80%—and you just kept dollar cost averaging all the way down until today, your returns would be over 14.5% per year.
If you're young and still saving, buying SCHD just for the dividend means you're giving up a lot of long-term potential. That could hurt you in the long run.
🛡️ Why I Still Choose SCHD
I have SCHD because it fits my goals and what I want from my portfolio. But remember—I've got real estate and businesses that are growing in value and generating cash flow. Only 30% of my net worth can be invested in the stock market.
So my portfolio isn't needed to get really high returns. It's to build stable money I can live off of, buy great companies at good prices, and buy low-cost ETFs like SCHD.
I don't need the fastest rocket ship to 10x returns. I want income that outpaces safe options like 90-day treasuries and good companies that will pay me while I hold them.
Right now, SCHD's dividend yield is better than what I can get from short-term treasuries. And unlike bonds, dividends can grow over time. That matters.
💡 Final Thoughts: Take the Long View
If the market fell 50% tomorrow, SCHD would fall hard too—of course it would. Maybe not 50%, but who knows?
That's why I dollar cost average every single month. I don't know when it's going to be up or down. That's why I buy all along the way. My return flattens out through all the volatility. Sometimes I pay a lot, sometimes a little, but over time I pay the same amount and get the market's return. It takes all the thinking out of it.
I love doing my projections for 21 years from now. I have goals for what I want at 65 so I can make big decisions about the remaining 30+ years of my life. SCHD fits into that goal.
Dollar cost averaging is something everyone needs to understand—because it's literally the simplest way to outperform all of your friends.