Dear SCHD ETF Fans, Mark Your Calendars for March 22
One of the interesting equities gaining traction in today’s session is an exchange-traded fund (ETF) — the Schwab Dividend ETF (NYSEARCA:SCHD). Today, the SCHD ETF is down nearly 2% following rhetoric coming from Federal Reser…
One of the interesting equities gaining traction in today’s session is an exchange-traded fund (ETF) — the Schwab Dividend ETF (NYSEARCA:SCHD). Today, the SCHD ETF is down nearly 2% following rhetoric coming from Federal Reserve Chairman Jerome Powell. That said, investors are clearly interested in this ETF, which has a big catalyst coming up on March 22.
The ETF’s upcoming ex-dividend date is March 22. That means that investors looking to capitalize on this fund’s upcoming dividend need to be invested, and shareholders of record, on or before March 22. This dividend will be payable on March 27.
With an expense ratio of only six basis points (0.06%), this is a very inexpensive way for investors to gain broad exposure to dividend-paying stocks. Its portfolio includes a wide range of companies with quality and sustainable dividends.
Let’s dive into what investors should consider when it comes to this ETF right now.
Is Now the Time to Buy the SCHD ETF?
Today’s near-2% decline in the SCHD ETF is notable for two reasons.
First, a move like today’s is a big one. This ETF provides broad exposure to a range of companies in different sectors, meaning its daily moves tend to be muted. The fact that most dividend-paying stocks are moving in the same direction is indicative of the environment we’re in.
This leads me to my second point. Today’s move lower in many income-producing investments seems tied to expectations that bond yields will rise faster than expected. Accordingly, when risk-free rates rise, the value of dividend-paying stocks also declines.
It’s worth noting that this ETF’s current yield is lower than that of short-term Treasury’s. Thus, investors are, theoretically, taking more risk to earn the same yield they could with government bonds. In this environment, it appears appetite remains weak. That said, significant investor interest in this fund on social media may indicate retail investors are growing increasingly interested in such options.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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