SCHD's Surprising Healthcare Bet: What It Holds and What It Doesn't

The Schwab U.S. Dividend Equity ETF (SCHD) has a significant allocation to healthcare stocks, with 20.7% of its portfolio dedicated to this sector.

This is surprising, given that two high-quality healthcare dividend stocks, Johnson & Johnson and Medtronic, are not among its holdings.

Instead, SCHD's top healthcare holding is Merck at 4.1%, while UnitedHealth is second-largest with a 3.9% allocation.

Matt DiLallo notes that these two companies have potential quality issues: Merck faces the loss of its biggest revenue driver, Keytruda, and UnitedHealth has struggled with growing costs and stagnant revenue.