SCHD Surges Past S&P 500 with Strong Dividend Track Record

The Schwab U.S. Dividend Equity ETF (SCHD) has outperformed the S&P 500 this year, climbing 25.8% compared to the index's 13.7%. The ETF tracks the Dow Jones U.S. Dividend 100 index, adding stocks with high-yielding dividends and a track record of consistent payments.

The top five holdings in SCHD are Coca-Cola (2.4% yield), Abbott Laboratories (2.2% yield), Amgen (2.4% yield), Merck (2.5% yield), and Home Depot (2.7% yield). These companies are Dividend Kings, with a history of increasing their dividend payouts for 50 or more consecutive years.

Investors may be attracted to high-yielding stocks, but it's essential to consider consistency as well. Stocks with ultra-high yields may not be sustainable and could result in drastically slashed or paused dividends, hurting shareholders who rely on income.