This Rock-Solid Dividend ETF Could Be a Better Option Than Tracking the S&P 500

Are you looking for a safer way to invest in the stock market right now than just tracking the S&P 500? There are thousands of exchange-traded funds (ETFs) to choose from, and an ideal one to consider today is the Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD).

While tracking the S&P 500 has historically been a good long-term option for investors, with significant exposure to the tech sector, it may not be ideal these days. The Schwab fund, however, which focuses on quality dividend stocks, may be a more suitable option for most investors. Here's why.

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Dividend stocks can boost returns and offer greater stability

Since dividend-paying companies pay their shareholders regularly, an obvious benefit is that even if a dividend stock doesn't rise significantly in value, the income it generates can help investors accumulate strong total returns. In a down year, when the market isn't doing well, that can be incredibly valuable.

Many companies that pay dividends also have strong financials, making them safer options than many other stocks. While not all dividend stocks fit into this category, this is why the Schwab fund is particularly valuable for investors -- it invests not just in any dividend stocks, but in those with sustainable payouts and strong fundamentals relative to their peers.

At 0.06%, it also has a very low expense ratio that can make it even more attractive as a long-term holding, as fees won't have a big impact on returns over the long haul.

The Schwab fund has low exposure to tech and offers a high yield

Investors get great diversification with the Schwab fund, with just 12% of its portfolio being in the tech sector, which is great for investors who want to keep volatility fairly low. At the same time, investors still get exposure to many different sectors of the market, with consumer staples, healthcare, and energy accounting for 55% of its entire portfolio. At 3.2%, the fund also offers an above-average yield, which is far higher than the S&P 500 average of approximately 1.1%.

For investors, there's ample incentive to buy and hold the Schwab fund, not only for its dividend but also for the excellent diversification and long-term stability that it can offer. And even with tech playing a limited role in its portfolio, the fund has still generated market-beating returns of around 30% this year -- and that's without factoring in its dividend yet.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.