The Smartest Dividend ETF to Buy With $500 Right Now
Key Points
The Schwab U.S. Dividend Equity ETF holds companies with strong performances and higher-yielding dividends.
Coca-Cola and Abbott Laboratories are both Dividend Kings that are in the ETF's top five holdings.
The ETF has easily outperformed the S&P 500 this year, climbing 25.8% compared to the index's 13.7%.
- 10 stocks we like better than Schwab U.S. Dividend Equity ETF ›
Dividend stocks with ultra-high yields are eye-catching. But over the long term, high yields may prove unsustainable and may need to be drastically slashed or even paused. That can hurt any shareholder who owns the dividend stock in hopes of reliable income.
That's why looking at consistency is just as important as considering yields. The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) may be a good fit for investors seeking higher yields paired with consistency.
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What SCHD holds
The goal of the Schwab U.S. Dividend ETF is to track the total return of the Dow Jones U.S. Dividend 100 index as closely as possible. That index adds stocks to its holdings that are high-yielding and have a track record of consistent dividend payments.
Within SCHD, the top five holdings are Abbott Laboratories, Amgen, Merck, Coca-Cola, and Home Depot. In order of yield, these are the highest payouts as of this writing:
- Abbott Laboratories: 2.2%
- Amgen: 2.4%
- Coca-Cola: 2.4%
- Merck: 2.5%
- Home Depot: 2.7%
On the surface, those may not sound like the highest-yielding stocks, but they are also high-quality companies that still pay respectable yields. Of those five, Coca-Cola and Abbott Laboratories are Dividend Kings, companies that have increased their payments for 50 or more consecutive years. Coca-Cola has increased its dividend payout for 64 consecutive years, while Abbott Laboratories has increased its dividend payout for 54 consecutive years.
Companies that can keep boosting their dividend payouts over time can serve as defensive positions against inflation and economic uncertainty. While uncertainty swirls, investors can continue to rely on those companies for income.
Also, just because those stocks are added to SCHD based on their dividend payouts and consistency, they can still offer stock price appreciation. That's because investors may rotate into these types of stocks when uncertainty increases, helping to boost prices. For example, shares of Coca-Cola are up 25.4% year to date, and shares of Amgen have fared even better, up 26.8%. Merck shares have done the best of the top five holdings so far in 2026, up 29%.
What a $500 investment offers
Thus far in 2026, SCHD has performed well, climbing 25.8% compared to the S&P 500's 13.7% gain. At a closing price of $34.52 on Aug. 14, $500 would purchase 14.48 shares through fractional investing. As of Aug. 13, SCHD's dividend yields 3.1%, which is higher than the top five positions we looked at earlier.
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:
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Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories, Amgen, Home Depot, and Merck. The Motley Fool has a disclosure policy.
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