Why Retirees Can’t Stop Buying This Schwab Fund After Its 12% Dividend Hike

When it comes to investing during retirement, your goals and timeline will look nothing like they did during your accumulation years. Your paychecks have stopped, and retirement savings must now cover the bills. Retirees tend to be cautious about where they put their money, and if you are hunting for reliable passive income, you are far from alone. Dividend stocks can deliver quarterly income, but exchange-traded funds offer a lower-cost, more diversified path to the same goal.

An exchange-traded fund (ETF) can be an ideal choice for retirees looking to enjoy passive income. It is a low-cost option that invests in a basket of stocks and offers steady income. There are hundreds of ETFs to choose from, but retirees have flocked to one Schwab fund in particular for its high yield and a 12% annual dividend hike in 2024. Let’s take a closer look at what makes it stand out.

An ETF Built for the Long Term

The Schwab US Dividend Equity ETF (NYSEARCA:SCHD) is a passively managed fund from the Schwab Asset Management team. It tracks the Dow Jones U.S. Dividend 100 Index, which targets high-yielding U.S. stocks with a consistent record of dividend payments and strong financial fundamentals. The fund screens out real estate investment trusts, preferred stocks, and master limited partnerships, and it applies hard caps so that no single stock exceeds 5% of assets and no sector exceeds 25%.

A Dividend-Rich Portfolio

SCHD now holds 102 stocks, providing broad diversification across a single, low-cost investment. The fund targets companies with strong track records of paying and raising dividends, names that have consistently grown their payouts and show the financial strength to keep doing so. These blue-chip holdings have made SCHD a reliable source of steady income for long-term investors.

Beyond the breadth of its holdings, SCHD’s sector mix sets it apart from most broad-market funds. The technology sector receives a deliberately limited allocation, which reduces the volatility that can accompany pure-growth names. That positioning makes SCHD particularly appealing to retirees who prioritize income stability over capital-appreciation swings. The fund manages approximately $109 billion in assets and charges an annual expense ratio of just 0.06%.

Steady Income, Starting Now

One of the most compelling reasons retirees keep buying SCHD is that income begins immediately. The fund carries a trailing dividend yield of around 3.19%, well above what the broader S&P 500 index offers. Because SCHD spreads its capital across dozens of dividend payers in different industries, the risk of any single company cutting its distribution has limited impact on the overall yield.

The 12% annual dividend increase that put SCHD in the spotlight refers to the 2024 calendar year, when the fund’s annual payout climbed 12.23%, from $0.8860 to $0.9944 per share. Since the fund launched in October 2011, its annual dividend has grown from roughly $0.22 per share to about $1.05, an increase of nearly 380%. That compounding income has helped long-term holders build purchasing power that outpaces inflation over time, and reinvesting dividends accelerates the process further.

SCHD’s sector makeup has shifted noticeably in recent years following the fund’s annual reconstitutions. Healthcare is now the largest allocation at roughly 21%, followed by Consumer Staples at about 19% and Energy at around 15%. Information Technology receives approximately 13% of assets. The fund’s top holdings as of late September 2026 include QUALCOMM (4.64%), Texas Instruments (4.59%), Procter & Gamble (4.24%), Coca-Cola (4.15%), Merck (4.12%), Chevron (4.10%), UnitedHealth Group (3.97%), Amgen (3.97%), Verizon (3.91%), and ConocoPhillips (3.86%).

SCHD delivered a total return of roughly 25% over the past twelve months, a strong showing for a fund focused on income rather than pure growth. The fund’s NAV as of late September 2026 stood at approximately $33.01. According to Schwab’s official fund page, a $10,000 investment made at SCHD’s inception in 2011 had grown to about $34,350 by August 2026, a result that reflects both share-price appreciation and dividend reinvestment over more than a decade.

Editor’s note: This article was updated to reflect SCHD’s current AUM of approximately $109 billion, its revised top holdings led by QUALCOMM and Texas Instruments, the current sector breakdown showing healthcare as the largest allocation at roughly 21%, the trailing dividend yield of approximately 3.19%, and performance data showing a one-year total return of around 25% with the fund’s NAV near $33 as of late September 2026.

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