These 4 Schwab ETFs Are Built for Retirement Stability
Investing
If you’re someone who doesn’t like to research individual stocks to generate long-term returns, exchange-traded funds can be your ideal choice. They allow you to build a diversified portfolio at low cost. Charles Schwab is one of the most popular brokers that has been around for years. It offers several low-cost ETFs to choose from.
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Schwab offers investors ETFs designed to generate steady income while maintaining low volatility.
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Each of these ETFs offer an incredible dividend yield at minimal risk.
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Schwab U.S. Dividend Equity ETF
It focuses on top-quality businesses that have demonstrated stability, resilience, and strength over the decade. The sector diversification is as follows:
- Energy: 21.08%
- Consumer staples: 19.06%
- Healthcare: 15.68%
- Industrials: 12.45%
- Financials: 8.36%
SCHD has a yield of 3.78% and a low-expense ratio of 0.06%. The fund focuses on the Dow Jones U.S. Dividend 100 index and ensures predictable income year after year. Its yield outpaces S&P 500 and it has generated a 3-year annualized return of 7.43% and 5-year return of 12.87%.
Schwab International Dividend Equity ETF
The Schwab International Dividend Equity ETF (NYSEARCA:SCHY) tracks the Dow Jones International Dividend 100 index and offers ultimate portfolio diversification. The fund invests in non-U.S. companies that have a record of paying dividends for at least 10 consecutive years. It focuses on financially strong companies that have low volatility.
The only difference between SCHD and SCHY is that this ETF invests in non-U.S. dividend paying companies. SCHY has a yield of 4.27% and an expense ratio of 0.08%. The ETF is ideal for steady income generation, considering the risk profile. It holds 152 stocks, and the sector diversification is as follows:
- Consumer staples: 15.30%
- Financials: 15.10%
- Industrials: 13.44%
- Communication services: 12.54%
- Healthcare: 11.57%
Its top holdings include ENEL, Wesfarmers Ltd, British American Tobacco and Unilever PLC.
The fund’s highest investment is in the United Kingdom, followed by Australia, France and Switzerland. SCHY has generated a 1-year annualized return of 20.18% and 3-year annualized return of 11.45%.
Schwab U.S. Large-Cap ETF
- Information technology: 29.15%
- Financials: 14.85%
- Healthcare: 11.07%
- Consumer discretionary: 10.27%
- Industrials: 9%
SCHX is top-heavy with the top 10 stocks comprising 34% of the portfolio. It has a yield of 1.16% and has significant capital growth potential. The NAV of the fund is up 10% in 12 months and is trading for $24.64 today.
It has a low expense ratio of 0.03% and has shown strong performance in the past few years. The top holdings in the fund include NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA), and Microsoft (NASDAQ:MSFT). SCHX is tech-heavy and gives access to some of the best tech giants in the industry.
However, since the fund is heavily diversified, you shouldn’t worry about the returns in case of an overall market sentiment shift. It has a 3-year annualized return of 19.75% and a 5-year annualized return of 16.34%. SCHX has generated 14.13% returns since inception.
Schwab High-Yield Bond ETF
If you’re only looking for a high-yield during retirement, the Schwab High Yield Bond ETF (NYSEARCA:SCYB) will not disappoint. It may not produce steady returns and could remain flat, but it has a yield above 7%. This attracts income investors.
SCYB has an expense ratio of 0.03% and has generated an annualized 1-year return of 10.06%. It was launched in 2023 and is a fairy new fund which has over 1,800 holdings. A large part of the fund is invested in BB-rated bonds, followed by B-rated bonds.
It does not have any A-rated bonds, and the majority of the bonds have a maturity period ranging from 3 to 5 years. SCYB offers optimal diversification by investing in over 1,800 bonds, which is ideal for retirees since the bond interest is taxed as ordinary income. It is a passive fund with the potential to generate steady income for investors.
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