The Schwab US Dividend Equity (SCHD) ETF stock has held steady this month even as the blue-chip indices like the Nasdaq 100 and S&P 500 crashed. The SCHD ETF stock was trading at $28.45 on Monday, up by about 6% from the lowest level this year. So, is it a good stock to buy this year?
SCHD has headwinds and tailwinds
The SCHD ETF stock has moved sideways in the past few days. It has faced numerous headwinds and tailwinds this year.
The biggest headwind is that the US has embarked on major changes, including the ongoing tariff issues by Donald Trump. He has announced tariffs on goods from key countries like Mexico, Canada, and China.
These tariffs will have an impact on most companies in the SCHD. However, the impact of these tariffs will be limited because of its constituents. The biggest firms in the fund are the likes of Abbvie, Amgen, Pfizer, and Bristol Myers Squibb.
The other top companies in the fund, like Cisco Systems, Chevron, and PepsiCo, will also be less affected by these tariffs.
The other big headwind is that there is a risk that the SCHD ETF will be impacted the potential slowdown of the American economy. A recent report by the Atlanta Fed estimates that the economy will contract by over 2% this year.
On the positive side, American companies are expected to continue reporting strong earnings. According to FactSet, the estimated earnings growth of this quarter will be 7.3%, marking the seventh-straight quarter of earnings growth.
Is SCHD ETF a good investment?
The SCHD ETF has become one of the best-known funds among investors because of its strong dividend growth. Data shows that it has a dividend yield of about 3.50%, providing consistent growth metrics.
The fund has a dividend growth rate of about 11% in the past ten years. Its five-year growth rate was about 11.60%, which is much higher than most dividend funds.
Still, there are concerns that US bond yields have remained above 4% in the past few weeks. The ten-year yield rose to 4.28%, while the 30-year and 2-year stood at 4.58% and 4%, respectively.
Some investors believe investing in these US Treasuries makes sense because they offer a higher yield. However, the challenge is that these treasuries will remain volatile as the Federal Reserve delivers its interest rate decisions.
However, the SCHD ETF offers better returns because of the stock performance. For example, $100,000 invested in US Treasury bonds 12 months ago would now be worth about $4,400. On the other hand, a similar amount invested in the fund would be worth over $12,000.
Read more: SCHD outlook for 2025: blue chip dividend ETF faces turbulence
SCHD ETF stock price analysis
The weekly chart shows that the SCHD ETF stock has been in a strong uptrend in the past few months. It has formed an ascending channel that connects the lowest and highest swings since April 2023.
The index has moved above the 50-week and 100-week Exponential Moving Averages (EMA), a bullish sign. Also, the Relative Strength Index (RSI) and the MACD indicators have pointed upwards.
Therefore, the outlook for the SCHD ETF share price will likely keep rising as bulls target the all-time high of $29.38. A move above that level will point to more gains, in the coming months.
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