SCHD Holdings, Sector Allocation, and Index Methodology
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Full bio →What SCHD Tracks
SCHD (Schwab U.S. Dividend Equity ETF) tracks the Dow Jones U.S. Dividend 100™ Index — a rules-based index of 100 high-dividend-yielding U.S. stocks selected for dividend consistency and financial quality. It is not simply a high-yield screen; it combines yield with quality metrics to exclude dividend traps.
Use the SCHD calculator to project income from any SCHD position using current yield and historical dividend growth.
Index Methodology: How Stocks Get Selected
The Dow Jones U.S. Dividend 100 Index follows a sequential screening process:
Step 1 — Universe: All U.S. exchange-listed stocks, excluding REITs, MLPs, and preferred stocks.
Step 2 — Liquidity filter: Minimum average daily trading volume and market capitalisation thresholds (screens out illiquid micro-caps).
Step 3 — Dividend consistency: At least 10 consecutive years of dividend payments. This single screen eliminates most of the stock market.
Step 4 — Quality score: Each remaining stock is ranked by a composite score of four fundamental metrics:
- Cash flow to total debt ratio
- Return on equity (ROE)
- Dividend yield
- 5-year dividend growth rate
Step 5 — Top 100 selected by composite score, then market-cap weighted with a 4.5% individual position cap per stock.
Rebalancing: Full reconstitution occurs each March. Quarterly reviews ensure position cap compliance.
Top Holdings (as of 2026)
| Rank | Stock | Ticker | Approx. weight |
|---|---|---|---|
| 1 | Texas Instruments | TXN | ~5.6% |
| 2 | UnitedHealth Group | UNH | ~5.0% |
| 3 | Chevron | CVX | ~4.2% |
| 4 | Coca-Cola | KO | ~4.0% |
| 5 | Verizon | VZ | ~3.8% |
| 6 | AbbVie | ABBV | ~3.7% |
| 7 | Lockheed Martin | LMT | ~3.5% |
| 8 | Altria Group | MO | ~3.4% |
| 9 | Home Depot | HD | ~3.2% |
| 10 | Blackrock | BLK | ~3.1% |
Top 10 holdings represent approximately 39–42% of total fund weight. Weights shift quarterly as prices move and are reset at the March reconstitution.
Sector Allocation
| Sector | Approx. weight |
|---|---|
| Financials | ~17% |
| Health Care | ~15% |
| Consumer Staples | ~14% |
| Energy | ~13% |
| Industrials | ~12% |
| Information Technology | ~11% |
| Communication Services | ~8% |
| Materials | ~5% |
| Utilities | ~3% |
| Other | ~2% |
SCHD deliberately underweights Technology (vs S&P 500) because most large-cap tech companies do not meet the 10-year dividend consistency requirement. This creates a meaningful sector divergence from S&P 500 index funds. For a full ETF-vs-ETF sector comparison, see SCHD vs VYM vs JEPI.
What SCHD Excludes
By design, SCHD excludes:
- REITs — removed at universe stage; covered by separate sector ETFs
- MLPs — removed at universe stage; different tax treatment
- Preferred stocks — not common equity
- Companies with fewer than 10 years of consecutive dividends — eliminates most growth stocks and recent IPOs
- Stocks with poor quality scores — high debt, low ROE, or declining dividend growth get ranked out
This exclusion list explains why SCHD has minimal exposure to Amazon, Alphabet, Meta, and Nvidia — none meet the 10-year dividend consistency screen.
Fund Facts
| Metric | Value |
|---|---|
| Ticker | SCHD |
| Issuer | Schwab Asset Management |
| Index | Dow Jones U.S. Dividend 100™ |
| Inception date | October 20, 2011 |
| Expense ratio | 0.06% |
| Number of holdings | ~100 |
| Distribution frequency | Quarterly |
| AUM | $60B+ (one of the largest dividend ETFs) |
| Consecutive years of dividend growth | 14+ years (as of 2026) |
The 0.06% expense ratio makes SCHD one of the most cost-efficient dividend ETFs available. Use the SCHD dividend income calculator to model how much the expense ratio costs you in compounded returns over 10, 20, and 30 years.