Why Ditching Schwab U.S. Dividend Equity ETF In the AI Era Is a Mistake

"The rapid rise of artificial intelligence (AI) has transformed the stock market in recent years, powering massive gains in technology giants and growth-oriented investments. At the same time, dividend-focused funds like the Schwab U.S. Dividend Equity ETF ( NYSEARCA:SCHD ) have faced scrutiny for lagging behind broader indices dominated by AI-driven companies. Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index, selecting high-quality U.S. firms with consistent dividend payments and strong financial ratios."

"Why SCHD Has Lagged the AI Boom The AI surge has concentrated market gains in a handful of mega-cap tech stocks, primarily the Magnificent Seven stocks. These companies prioritize reinvesting profits into growth rather than paying substantial dividends, limiting their presence in the ETF's portfolio. Schwab's top holdings include stable names like Merck ( ), Cisco Systems ( NASDAQ:CSCO ), Amgen ( NASDAQ:AMGN ), and AbbVie ( ), as well as energy stocks such as Chevron ( ) and ConocoPhillips ( P)."

AI-driven gains have concentrated in a handful of mega-cap technology firms, producing explosive returns that have left many dividend-focused funds behind. Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index, selecting high-quality U.S. firms with consistent dividend payments and strong financial ratios. The ETF yields about 3.8% and carries a 0.06% expense ratio. Portfolio weightings favor energy, consumer discretionary, healthcare and industrials, with top holdings including Merck, Cisco Systems, Amgen, AbbVie, Chevron and ConocoPhillips. Limited exposure to pure AI leaders has produced relative underperformance, though dividend strategies provide income, quality and long-term stability.

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