The S&P 500 index is currently at all-time highs, with a yield of around 1.3%. If you have $1,000 or more to invest, you might consider the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD), which offers a higher yield of 3.4%.
While there are other ETFs with even higher yields, such as the SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD) with a 4.4% yield, it’s important to look beyond just the dividend yield. The SPDR Portfolio ETF focuses on the highest-yielding stocks in the S&P 500, which may include companies facing challenges like Hasbro, which experienced a revenue decline.
The Schwab U.S. Dividend Equity ETF takes a different approach by selecting companies that have increased their dividends for at least 10 consecutive years. This strategy helps identify financially strong companies that regularly hike dividends.
In addition to dividend increases, the ETF considers factors like cash flow to total debt, return on equity, and dividend yield to create a composite score. The top 100 companies are then selected and weighted by market capitalization, focusing on financially strong companies that can weather market downturns.
Investors should remember that yield alone is not the only factor to consider when choosing stocks. The Schwab U.S. Dividend Equity ETF offers a balance of yield and quality, making it a good option for investors looking to navigate market highs and potential downturns.
Before investing in the ETF, investors may want to explore other stock options recommended by the Motley Fool Stock Advisor analyst team, which has a track record of identifying stocks with significant potential for growth. It’s important to conduct thorough research and consider all factors before making investment decisions.