Patience in dividend stock investing pays off over time. If you bought the Schwab U.S. Dividend Equity ETF when it launched in October 2011, you started with a modest yield of around 2.6%.
Today, thanks to more than a decade of consistent dividend growth, early investors are collecting a yield on cost of 12.5% on their original investment.
That’s the power of owning quality dividend stocks for the long haul. And the Schwab U.S. Dividend Equity ETF (SCHD) has been one of the best vehicles to do it.
The SCHD ETF remains a great, reliable choice for investors looking for passive income.
Morningstar’s Bryan Armour, Director of ETF and Passive Strategies Research for North America, wrote that:
“SCHD stands out for its sensible, transparent, and risk-conscious approach that should generate better long-term risk-adjusted returns than the Russell 1000 Value Index.”
Funds like SCHD invest in stocks with at least 10 years of consecutive dividend payments, screened for financial strength, with income backed by cash flow and sustainable payouts.
Over the long term, these ETFs deliver higher returns, and reinvestment of dividends can lead to wealth generation.
The math behind a 12% dividend yield on cost
Here’s how the numbers break down for an early investor.
When SCHD launched in October 2011, shares traded at around $8.47.
A $1,000 investment would have bought roughly 118 shares. The annualized dividendthat year was just $0.224 per share, generating about $26 in annual income. That’s a starting yield of 2.6%.
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Fast forward to today. The annual dividend per share has climbed to $1.055. Those same 118 shares now generate approximately $124.50 in annual income. That’s a yield on cost of roughly 12.4%.
The share price has risen, too, of course. But the point is this: the income from the original investment alone has multiplied nearly fivefold.
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Since its inception in October 2011, SCHD has delivered a cumulative total return of 490%, equating to a 13.3% annualized average.
A $10,000 investment in the fund has grown to over $59,000 as of March 2026, after adjusting for dividend reinvestments.
Why SCHD is a top dividend stock ETF
The SCHD ETF tracks the Dow Jones U.S. Dividend 100 Index, which only includes companies that have raised dividends for at least 10 straight years and pass strict screens for cash flow, return on equity, and dividend growth.
- The ETF is reconstituted once a year in March, forcing it to sell stocks that no longer meet the tests and buy those that now rank highest.
- The result is a portfolio of high-quality dividend stocks spanning energy, consumer staples, health care, and financials.
- Top holdings as of April 2026 include Texas Instruments, UnitedHealth Group, Chevron, PepsiCo, and Coca-Cola.
Key SCHD ETF dividend and fund metrics to know:
- 30-day SEC yield: 3.84%
- Distribution yield: 3.82%
- Annual dividend per share (2025): ~$1.055
- 5-year annualized return: 8.59%
- 10-year annualized return: 12.37%
- Since inception, annualized return: 13.01%
- Total expense ratio: 0.06%
- Portfolio turnover rate: 44.10%
- Price-to-earnings ratio: 20.05
- Return on equity: 25.59%
- 3-year standard deviation: 13.59%
- Sharpe ratio (3-year): 0.14
The expense ratio deserves a special mention. At just 0.06%, SCHD is one of the cheapest dividend stock funds on the market.
SCHD’s dividend growth is the real story
Dividend growth builds long-term wealth.
SCHD’s annual payout has climbed from $0.224 per share in 2011 to over $1.05 today, a fivefold increase in just 14 years. That works out to a compounded annual dividend growth rate of roughly 12%.
This kind of growth is only possible with a well-screened portfolio of dividend stocks with durable business models and growing cash flows.
Related: Why the Schwab Dividend ETF (SCHD) Is losing its edge to Vanguard
The SCHD ETF provides significant exposure to consumer staples, energy, and health care sectors, industries that generate steady cash flow across economic cycles, making dividend growth more predictable.
In April 2026, SCHD offers a dividend yield around the high-3% range with a history of near-double-digit dividend growth, making total return heavily dependent on reinvested income rather than rapid price appreciation.
Wall Street appears to agree the fund still has legs. Based on 101 analyst ratings on SCHD’s holdings, the consensus is a “Moderate Buy”, with an average 12-month price target of $34.47 representing upside of 11% from recent prices.
The case for staying patient with Dividend ETFs
The SCHD story isn’t just about a great fund. It’s about what happens when you stay invested in quality dividend stocks and let time do the heavy lifting.
Most investors focus on current yield. Early SCHD buyers didn’t get rich overnight, given that the initial dividend yield was under 3%.
But they let the dividends compound, the payouts grow, and the portfolio do what it was built to do.
SCHD’s inclusion criteria look at a company’s five-year dividend growth, return on equity, cash flow to debt, and dividend yield: a built-in vetting process that reduces the chances of yield traps slipping through.
With $87.5 billion in total net assets and 104 holdings, SCHD is one of the largest and most trusted dividend stock ETFs in America.
For investors who got in early, it’s now writing them a check worth more than 12 cents per dollar they originally invested, every single year.
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