The Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD) has increasingly attracted attention from income-focused investors navigating an uncertain macroeconomic backdrop. Launched in 2011 and now managing approximately $83.99 billion in assets, SCHD is designed to track the Dow Jones U.S. Dividend 100 Index, offering exposure to high-quality, dividend-paying large-cap U.S. companies. In an environment marked by fluctuating interest rate expectations and elevated equity valuations, dividend strategies are regaining relevance as a source of stability and total return.

Why Large-Cap Value Is Back in Focus

Large-cap value stocks typically represent companies with market capitalizations exceeding $10 billion and are often characterized by durable cash flows, mature business models and shareholder-friendly capital allocation policies. These companies generally exhibit lower price-to-earnings and price-to-book ratios relative to growth peers, while delivering consistent dividend payments.

Historically, value stocks have outperformed growth stocks over long market cycles, although they tend to lag during aggressive bull runs driven by high-growth technology names. In the current market environment—where volatility has risen and investors are increasingly selective—defensive positioning through value exposure appears strategically relevant.

SCHD’s portfolio tilts toward sectors traditionally associated with income and stability. Energy represents approximately 20.3% of assets, followed by Consumer Staples and Healthcare. Its top holdings include Bristol Myers Squibb (BMY), Merck & Co. (MRK) and ConocoPhillips (COP), with the top 10 positions accounting for roughly 40.44% of total assets.

Cost Efficiency and Income Appeal

One of SCHD’s strongest competitive advantages is its ultra-low expense ratio of 0.06%, positioning it among the most cost-efficient ETFs in the large-cap value space. Over the long term, lower fees can meaningfully enhance compounding returns, particularly in income-oriented strategies.

The ETF’s 12-month trailing dividend yield stands at 3.31%, significantly above the broader S&P 500 average. For investors seeking a blend of capital appreciation and income generation, this yield profile provides a compelling alternative to fixed-income instruments, especially if rate cuts materialize later in 2026.

Performance, Risk Metrics and Alternatives

Performance has been solid. As of mid-February 2026, SCHD has returned approximately 15.24% year-to-date and 17.26% over the past year. Over the last 52 weeks, it has traded between $24.32 and $31.64.

From a risk perspective, SCHD carries a beta of 0.73 and a three-year standard deviation of 13.3%, indicating lower volatility relative to the broader equity market. With around 102 holdings, it provides sufficient diversification to mitigate company-specific risks while maintaining a concentrated quality screen.

Investors comparing alternatives may also consider Vanguard High Dividend Yield ETF (VYM) and Vanguard Value ETF (VTV), both offering lower expense ratios of 0.04% and 0.03%, respectively. However, SCHD’s disciplined dividend-growth methodology and strong historical execution distinguish it within the segment.

Looking ahead, SCHD appears well positioned for investors seeking downside resilience and steady income in a market facing shifting interest rate dynamics and sector rotation. Monitoring dividend sustainability, sector allocation shifts and macroeconomic developments will be key in assessing whether large-cap value can continue to outperform through 2026.