Prediction: This Dividend ETF's Yield Won't Stay Under 3.5% for Long
2026-07-21 21:05
•David Dierking •The Motley Fool
•••• •• Axe Capital view
Why SCHD’s Yield Dip Isn’t Cause for Alarm
The Schwab U.S. Dividend ETF’s yield has slid below 3.5%, but dividend growth suggests it won’t stay there long.
SCHD’s yield sits at 3.3%, a bit under its historic 3.5% average, mainly because strong price gains—up 22% this year—have pushed yields down. This isn’t a bad sign; it signals investor confidence in steady dividend payments rather than a cut. SCHD’s history of 14 years straight of dividend hikes gives it credibility. For South African investors watching USD/ZAR, the rand’s recent stability against the dollar means this yield dynamic is worth monitoring as a proxy for global income assets. While U.S. tech stumbles like IBM highlight risks to earnings growth, SCHD leans heavily on companies with resilient cash flows, which can help shield income during volatility. That said, any sharp U.S. interest rate shifts or sudden rand weakness could disrupt the expected dividend rebound. this is just my opinion and not financial advice
I’d watch SCHD as a potential addition for steady income but keep exposure modest given currency and rate risks. Locally, holding first-tier banks and diversified counters remains sensible while keeping an eye on USD/ZAR trends.
- SCHD
- USD/ZAR
- U.S. interest rate shocks
- unexpected rand depreciation
6/10
The Schwab U.S. Dividend Equity ETF (SCHD) currently yields 3.3%, below its long-term average of 3.5%, due to strong price appreciation of 22% year-to-date. Despite the lower yield, the fund has increased its annual dividend for 14 consecutive years and is expected to push the yield back above 3.5% within the next year as dividend growth outpaces share price gains.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: David Dierking
Categories: Rates, Equities, Earnings, Capital Returns
Tickers: SCHD, IBM
Sentiment: Mixed - The ETF demonstrates consistent dividend growth (14 consecutive years of increases), strong year-to-date performance (+22%), and is positioned to outperform in potential market downturns. The author expects the yield to rebound to 3.5% within the next year, indicating confidence in the fund's dividend-generating ability and long-term value proposition. IBM is mentioned as a cautionary example of underperforming earnings expectations and negative market reaction, used to illustrate the risk that U.S. stocks face if they fail to deliver on earnings growth expectations.
Keywords: dividend ETF, yield, dividend growth, SCHD, income investing, market correction, total returns
Insights:
- SCHD: Positive: The ETF demonstrates consistent dividend growth (14 consecutive years of increases), strong year-to-date performance (+22%), and is positioned to outperform in potential market downturns. The author expects the yield to rebound to 3.5% within the next year, indicating confidence in the fund's dividend-generating ability and long-term value proposition.
- IBM: Negative: IBM is mentioned as a cautionary example of underperforming earnings expectations and negative market reaction, used to illustrate the risk that U.S. stocks face if they fail to deliver on earnings growth expectations.
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