In December, I Picked the Schwab U.S. Dividend Equity ETF as My Top High-Yield ETF to Buy, and It's Already Up 15% in 2026. Here's Why It's Still a Buy Now.

When I picked the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) arsenic a large bargain for passive income investors successful December, I surely didn't expect it to rocket 14.7% higher little than six weeks into the caller year, particularly considering the S&P 500 (SNPINDEX: ^GSPC) is lone up 1.3%.

Here's wherefore this seemingly stodgy exchange-traded money (ETF) is roaring to caller heights and wherefore it could inactive beryllium a bargain now.

Where to put $1,000 close now? Our expert squad conscionable revealed what they judge are the 10 champion stocks to bargain close now, erstwhile you articulation Stock Advisor. See the stocks »

Investors gravitate to the Schwab U.S. Dividend Equity ETF for its precocious yield, which is 3.5% astatine the clip of this penning but was implicit 4% astatine definite points past twelvemonth earlier the fund's caller run-up. The ETF offers investors a mode to enactment successful the banal marketplace and make a precocious output from a handbasket of stocks portion incurring a specified 0.06% disbursal ratio, oregon $6 for each $10,000 invested. The money has a importantly higher output than different popular, low-cost ETFs. For example, the Vanguard High Dividend Yield ETF yields conscionable 2.3%.

Some ETFs execute higher yields by investing successful a premix of stocks and bonds, oregon by selling covered calls connected their equity holdings, which increases passive income but besides caps upside. What makes the Schwab U.S. Dividend Equity ETF unsocial is that it is 100% invested successful stocks. And it achieves its precocious output by targeting sectors with industry-leading companies that prioritize returning superior to shareholders done dividends.

A staggering 54.6% of the ETF is invested successful the energy, user staples, and healthcare sectors -- each of which are chock-full of high-yield stocks. By comparison, the S&P 500 allocates lone 17.6% to these 3 sectors.

In caller years, the Schwab U.S. Dividend Equity ETF has underperformed the S&P 500 due to the fact that it is underweight sectors similar exertion and communications that person been driving broader marketplace returns. But truthful acold successful 2026, it's the stodgy sectors that are successful the spotlight.

^IXE information by YCharts.

The vigor assemblage -- which makes up 19.9% of the Schwab U.S. Dividend Equity ETF -- is crushing the S&P 500 successful 2026. Consumer staples are besides 1 of the best-performing sectors, whereas exertion and communications person incurred insignificant sell-offs.

Despite its caller run-up, determination are plentifulness of reasons wherefore the Schwab U.S. Dividend Equity ETF remains a coagulated bargain now. The money is heavy concentrated successful large-cap stocks, with astir 90% of the ETF invested successful companies with marketplace caps of astatine slightest $15 billion. What's more, the largest holding successful the fund, which is Lockheed Martin, makes up 4.6% of the ETF. The money is good balanced crossed manufacture leaders alternatively than relying connected a fistful of stocks to thrust gains.