Why SCHD Stock May Lagging SPY

Why SCHD Stock Investing in ETFs requires careful consideration of sector risk, performance indicators, and overall economic outlook. The Schwab US Dividend Equity ETF (SCHD) has long been popular with profit-oriented investors due to its high dividend yield and low expense ratio. However, when compared to the SPDR S&P 500 ETF Trust (SPY), SCHD may struggle to generate comparable returns. This article explores the key factors behind SCHD’s underperformance and assesses its outlook in the current market environment.

Understanding SCHD Sector Allocation

The Schwab US Dividend Equity ETF (SCHD) is a popular choice for dividend investors. However, its performance can lag behind thailand telegram data the SPDR S&P 500 ETF Trust (SPY) due to a number of factors. SCHD is significantly underweight in technology stocks and has overly high exposure to the financial sector, particularly banks.

As of December 2024, SCHD’s largest holdings include Cisco Systems Inc. (CSCO), Bristol-Myers Squibb Company (BMY), and The Home Depot, Inc. (HD). Financial services accounted for approximately 20.13% of the portfolio.

The impact of interest rates on SCHD shares

The downward trend in interest rates is likely to benefit growth-oriented technology stocks over the long term, which account for a larger b2b influencer
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portion of SPY. Conversely, banks, which make up a larger portion of SCHD’s holdings, could face headwinds as higher deposit costs weigh on net interest margins. This difference in sector sensitivity to macroeconomic trends further explains why SCHD may struggle to outperform SPY.

SCHD Evaluation and Performance Indicators

SCHD’s valuation discount to SPY has fallen significantly from 40.5% to 16.5%, making SCHD less attractive on a valuation basis compared to the previous period.

In terms of performance, SCHD’s total caseno email list return as of December 13, 2024, is 15.27%, while SPY has a higher return of 21.36% over the same period. As of December 2024, SCHD’s share price is around $79.50. This widening performance gap highlights the challenge SCHD faces in matching SPY’s growth potential.

Comparison of dividend yields

One of SCHD’s key selling points is its higher dividend yield. As of December 2024, SCHD offers a dividend yield of approximately 3.6%, compared to SPY’s yield of 1.5%. For income-oriented investors, this higher yield may offset some of its underperformance in terms of capital appreciation.

Expense Ratio Analysis

SCHD has a low expense ratio of just 0.06%, which is slightly lower than SPY’s expense ratio of 0.09%, making SCHD an attractive option for cost-conscious investors who value keeping management fees to a minimum.

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