2 High-Yield Schwab ETFs That Cut Big Dividends

There’s a reason some investors tend to favor ETFs, or exchange-traded funds, over individual stocks. When you buy stocks one by one, you need to research each one carefully. With an ETF, you get to own a collection of assets with a single investment, which cuts down on much of the work.

If you’re looking for a way to generate steady income for your portfolio, it pays to specifically focus on dividend ETFs. Dividend ETFs can be particularly appealing for retirees, who may want the relative stability they offer.

Of course, ETFs aren’t risk-free by any means. But any asset that generates income offers a level of protection against market volatility. And if you’re at a stage of life where that income is important to you, then it could pay to focus on dividend ETFs. Here are two Schwab picks you may want to look at.

1. The Schwab US Dividend Equity ETF (SCHD)

The Schwab US Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index, which focuses on companies with a history of increasing their dividends year after year. The fund’s aim is to buy quality stocks with generous dividends for reasonably predictable income.

The Schwab US Dividend Equity ETF has an expense ratio of just 0.06%, which means that as an investor, you could be looking at a lot of upside at a very low cost. Meanwhile, the Schwab US Dividend Equity ETF’s dividend yield is nearly 4% as of this writing, which well outpaces the S&P 500’s yield.

2. Schwab International Dividend Equity ETF (SCHY)

The Schwab International Dividend Equity ETF is similar to the Schwab US Dividend Equity ETF, only it tracks the Dow Jones International Dividend 100 index instead. That’s an important difference, though.

Investing in international stocks is a great way to diversify. But it also potentially opens the door to more risk.

The Schwab International Dividend Equity ETF invests in non-U.S. companies with a record of paying dividends for at least 10 years in a row. The fund also aims to invest in companies that are strong financially with lower levels of volatility.

With an expense ratio of 0.08%, you have an opportunity to diversify your portfolio and generate income at a fairly low cost. And with a yield of 4.37%, it’s a pretty nice return given the risk profile.

Are dividend ETFs right for you?

If your goal is to have your portfolio produce as much income as possible without taking on undue risk, then dividend ETFs can make a lot of sense. But if you’re still in the process of growing wealth for retirement, you may want to branch out beyond dividend ETFs.

This isn’t to say that they can’t be part of your strategy. But you may want to add some growth ETFs to your portfolio if you’re only part of the way through your long-term savings journey, or even individual growth stocks. The combination of the two could provide you with a nice balance and be conducive to meeting your financial goals.