Beyond U.S. Borders: How Much You Need in SCHY to Collect $2,000 a Month From International Dividends
Most retirement income plans never leave American soil, but some of the world's most reliable dividend payers are based in Switzerland, Germany, and Australia. Here is exactly what it takes to collect $2,000 a month from them using a single…
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For some retirees, their whole income plan runs through American companies. They may have Social Security, a U.S. dividend fund, and maybe some Treasuries. Every check comes from a U.S.-based business. That plan works, but it leaves out companies like Roche, DHL, and Wesfarmers, which have spent decades paying shareholders in Switzerland, Germany, and Australia.
Here’s what it takes to collect $2,000 a month, or $24,000 per year, in international dividends, using one Schwab fund as the anchor. All figures reflect current data.
A Low-Cost Fund Built Around 100 Foreign Dividend Payers
Schwab International Dividend Equity ETF (NYSEARCA:SCHY) tracks the Dow Jones International Dividend 100 Index. The index picks 100 high-dividend-yielding stocks outside the US, then screens them for fundamental quality and low volatility. Put simply, it looks for companies that can actually afford their dividends.
The fund charges 0.08% a year and holds 133 stocks. Industrials make up the biggest piece at 16%, followed by financials at 15% and communication services at 14%. Eni and Roche are the largest positions at roughly 4.4% each, and Vinci, Enel, and Wesfarmers also rank near the top.
How Much SCHY You Need for $2,000 a Month
SCHY trades near $33 and paid $1.17 per share over the past year. That works out to a trailing yield of about 3.6%. Trailing yield is just last year’s payouts divided by today’s price. With that yield, $24,000 divided by 3.57% equals about $672,000, which buys roughly 20,400 shares.
If you annualize the latest quarterly payment, the forward yield comes to about 3.8%, and the target drops to roughly $625,000. Schwab also posts a 30-day SEC yield, a standardized number based on the last month’s income after fees, and you can find it on the fund page, since it can be above or below the trailing figure.
Higher Yields Cost Less Upfront and Carry More Risk
SCHY sits in the conservative 3% to 4% tier. A moderate tier, with typical yields of 5% to 7%, includes international high-dividend funds, emerging-market dividend funds, and foreign real estate funds. At 6%, $24,000 divided by 6% equals $400,000. The tradeoff is slower payout growth and greater exposure to banks, energy, and state-linked companies.
An aggressive tier, with typical yields of 8% to 14%, includes international covered-call funds and emerging-market high-yield bond funds. At 10%, $24,000 divided by 10% equals $240,000. Funds like these often return part of your principal, and they cut distributions when markets turn.
Why Payout Growth Beats a Bigger Starting Check
SCHY paid about 14% more over the last 12 months than over the 12 months before. When a fund’s payouts grow, you need less capital each year to hit the same $2,000. A 10% payer with flat distributions works the other way: inflation eats into the check while the principal often falls. A weaker dollar helped SCHY’s recent growth, so don’t expect the same rate every year.
Your Checks Won’t Arrive Every Month
SCHY pays quarterly, and the amounts swing. Over the past year, payments ran from $0.18 a share in March to $0.36 in June. With 20,400 shares, that’s about $3,700 in March against $7,300 in June. Treat $2,000 as a monthly average and keep enough cash on hand to cover a light quarter.
Taxes and the Dollar Decide What You Keep
Foreign governments often withhold tax on dividends before the money ever reaches the fund, but in a taxable account, you may be able to claim a foreign tax credit. If your foreign taxes total $300 or less ($600 for joint filers), you can usually claim the credit without filing Form 1116. Inside an IRA, there’s no US tax to offset, so the credit goes unused.
Dividends from companies in treaty countries can count as qualified. Such countries include the U.K., France, Germany, Switzerland, and Australia, and that status means a lower tax rate. You’ll need to have held the shares for more than 60 days during the 121-day period around the ex-dividend date. Your 1099-DIV shows how much qualified dividends you received each year.
Currency matters too, as SCHY holds unhedged foreign equities. A stronger dollar reduces euro and pound payouts once they’re converted, and a weaker dollar grows them.
What to Track Once a Year to Protect Your Income
Hold the fund in a taxable account if you want to use the foreign tax credit. Then, once a year, compare SCHY’s trailing 12-month distribution total with the year before. That one number tells you whether your income is growing, holding steady, or reducing, and whether your income plan needs adjusting.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
