Whether you're just out of school and starting to invest for the very first time or you're retired and looking to live off of the wealth you've acquired, most people would agree that stocks should, in some form, be a part of your portfolio. Young folks should be building their core portfolio around high quality dividend-paying stocks that have the potential to outperform the market over time. Retirees can use the steady, predictable income from these companies, while adding a little punch to their portfolio to keep ahead of inflation. Finding a fund that can deliver on both of these objectives, while charging one of the lowest expense ratios in the industry, is a recipe for an ETF that you can buy and hold forever!
The fund I'm referring to is the Schwab U.S. Dividend Equity ETF (SCHD).
SCHD follows the Dow Jones U.S. Dividend 100 Index, which provides exposure to high dividend yielding stocks with a history of consistently paying dividends and demonstrating relative fundamental strength. All index eligible stocks must have sustained at least 10 consecutive years of dividend payments. Note that the requirement isn't for 10 consecutive years of dividend GROWTH, just 10 consecutive years of payments. In reality, this is a minor detail since most names that qualify for SCHD are indeed dividend growers and the financial strength screens help ensure that dividend payments are secure going forward.
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