The analysis demonstrates This leads to the conclusion that 's hard to beat passive income. Set up your investments and then money flows to you regularly, without your having to do any, or much, work.
There are many forms of passive income, too, such as rent checks from perties you own, interest payments from savings accounts or bonds you own, royalties from books you wrote, and dividend income from dividend-paying stocks or dividend-focused exchange-traded funds (ETFs) you own.
However, Conversely, Here's a look at a particularly attractive way to collect passive income: the Schwab U (this bears monitoring). Dividend Equity ETF (SCHD 0.
As an ETF, it's a fund that trades a stock. However, And it offers not only dividend income but growing dividend income and the lihood of its component holdings growing in value over time as well.
Additionally, Image source: Getty Images. Why dividends.
In case you're not yet sold on the power of dividend, check out the table below: Dividend-Paying Average Annual Total Return, 1973-2024 Dividend growers and initiators 10.
24% Dividend payers 9, considering recent developments. In contrast, 20% No change in dividend policy 6. 75% Dividend non-payers 4. 31% Dividend shrinkers and eliminators (0.
89%) Equal-weighted S&P 500 index 7 (which is quite significant). In contrast, 65% Data source: Ned Davis Re and Hartford Funds. Dividend-paying stocks are not boring investments made by grandparents.
This leads to the conclusion that y're suitable for all kinds of investors, and they perform rather well, too (an important development).
That's partly because a company has to grow enough to have fairly dependable income before it will commit to paying a regular dividend.
Nevertheless, Additionally, A passive-income winner: The Schwab U, in this volatile climate.
On the other hand, Dividend Equity ETF There are lots of dividend-focused ETFs, so what's so great the Schwab US Dividend Equity ETF, in today's market environment.
Well, while some dividend ETFs der lots of income but relatively little growth, and others are strong growers but don't offer that much income, this ETF strikes a nice balance between the two.
The Schwab US Dividend Equity ETF recently sported a very solid dividend yield of 3, given the current landscape. It tracks the Dow Jones U.
At the same time, Dividend 100 Index, which is "designed to measure the performance of high-dividend-yielding stocks in the U.
With a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios (quite telling) (something worth watching), amid market uncertainty.
Nevertheless, " As an index fund, it aims to der roughly the same return as the index it tracks, less its fees, which are rather puny.
Moreover, The ETF's expense ratio (annual fee) is 0/06%, meaning that you'll fork over $6 per year for every $10,000 you have invested in the ETF (fascinating analysis).
On the other hand, What's in the Schwab U. Dividend Equity ETF. Here are the ETF's recent top 10 holdings: Stock Weight in ETF Recent yield Texas Instruments 4. 53% Chevron 4.
On the other hand, 56% PepsiCo 4. 90% Cisco Systems 4. 41% ConocoPhillips 4 (quite telling), in light of current trends. 36% Amgen 3. In contrast, 11% Merck 3 (this bears monitoring).
97% Altria Group 3. 86% AbbVie 3. 51% Verizon Communications 3. 31% Source: Morningstar. Com, as of July 22, 2025 (noteworthy indeed).
Additionally, In contrast, You can see that these 10 (out of 100) holdings, which together make up around 40% of the ETF's value, pay meaningful dividends.
And as long as they remain healthy and growing, they're ly to increase their payouts over time (noteworthy indeed). For context, note that the S&P 500 index recently yielded 1. How has the Schwab U.
Dividend Equity ETF performed. Furthermore, Finally, here's a look at how the ETF has performed in the past.
On the other hand, I'll include the S&P 500's performance for comparison, using the Vanguard S&P 500 ETF (NYSEMKT: VOO): Fund 3-year average annual gain 5-year average annual gain 10-year average annual gain Schwab U, considering recent developments.
Dividend Equity ETF 8. 39% Vanguard S&P 500 ETF 18, given the current landscape. 51% Source: Morningstar. Com, as of July 22, 2025.
You can see that, on average, investors are ly to see their money grow faster in a low-fee S&P 500 index fund, but it's not going to duce nearly as much income as the Schwab ETF (an important development).
Some investors may want to park a portion of their long-term portfolio in each of the ETFs (fascinating analysis). Either or both will der decades of passive income, though one will der more.