Should You Buy SCHD at $31 or Wait for a Better Entry Point?

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is an index fund that tracks the Dow Jones U.S. Dividend 100 Index. In simple terms, the ETF owns shares of 100 companies that pay above-average dividend yields and meet other criteria, such as having paid dividends for at least 10 consecutive years.

To put it mildly, the Schwab U.S. Dividend Equity ETF is one of the most popular dividend-focused index funds. It has an excellent 3.4% dividend yield, a low 0.06% expense ratio, and gives broad exposure to top-quality dividend stocks.

However, at a current price of more than $31 per share, the ETF is trading within striking distance of its 52-week high and is up by more than 20% over the past year. So, many investors are probably asking themselves, "Should I buy now, or wait for a better price?"

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Is the Schwab U.S. Dividend Equity ETF a good buy now?

First, just because a stock or ETF has gone up doesn't necessarily mean it's "expensive." In fact, some of its top holdings trade at price-to-earnings multiples far below the S&P 500 average.

Second, the Schwab U.S. Dividend Equity ETF is a top-quality index fund with a portfolio of rock-solid companies and is likely to deliver strong returns over the long term, regardless of the price you pay for shares. Top holdings include Texas Instruments (NASDAQ: TXN), Chevron (NYSE: CVX), Coca-Cola (NYSE: KO), and Home Depot (NYSE: HD), among others. The ETF is likely ot deliver strong returns and create a growing income stream over time.

Buy now or wait?

Of course, it would certainly be preferable to buy the Schwab U.S. Dividend Equity ETF at a lower share price. But nobody knows if or even when that could happen. One of the most valuable lessons a long-term investor can learn is that trying to time the market rarely works out. It's common for investors to wait for a "better price," only to see the investment they want to own keep rising.

One strategy is to buy shares incrementally over time instead of all at once, a concept known as dollar-cost averaging. As a simple example, instead of investing $5,000 in the ETF all at once, maybe commit to buying $1,000 worth of shares each month for the next five months. This way, you're putting some of your money to work right away. If the share price ends up falling, you'll buy more shares at a lower price. If it doesn't, you'll still be building a position in a top-quality index fund in your portfolio.

Matt Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron, Home Depot, and Texas Instruments. The Motley Fool has a disclosure policy.