1 No-Brainer High-Yield Dividend ETF to Buy During the Stock Market Correction

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Matt DiLallo, The Motley Fool

Sun, Mar 16, 2025, 3:19 PM 4 min read

Stock marketplace sell-offs are often large opportunities to bargain dividend stocks. That's due to the fact that dividend yields determination successful the other absorption of banal prices. So, with the banal marketplace precocious correcting (defined arsenic a diminution of 10% oregon much from the peak), dividend yields are present higher.

One of the easiest ways to capitalize connected this accidental is to bargain the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). The money holds 100 of the apical high-yielding dividend stocks. With its worth falling with the marketplace and its output on the rise, it's a no-brainer dividend exchange-traded money (ETF) to bargain close now.

The Schwab U.S. Dividend Equity ETF strives to way the show of the Dow Jones U.S. Dividend 100 Index, which aims to measurement the returns of stocks with accordant records of paying higher-yielding dividends backed by stronger fiscal metrics than their peers. Like that index, the ETF holds astir 100 stocks. However, its apical 10 holdings comprise much than 40% of its assets. That radical is similar a who's who of top-tier dividend stocks.

For example, top-holding AbbVie (NYSE: ABBV) has a terrific record of paying dividends. The pharmaceutical elephantine has accrued its dividend every azygous year since its enactment successful 2013 and has grown its payout by 310% during that period.

The institution presently has a 3.1% dividend yield, which is much than treble the dividend output of the S&P 500 (recently 1.35%). The institution tin easy spend its high-yielding payout. AbbVie generated $18.8 cardinal successful operating currency travel past year, much than covering its $11 cardinal dividend outlay.

Meanwhile, the institution expects to present high-single-digit yearly gross maturation done astatine slightest 2029, driven by increasing sales of Skyrizi, Rinvoq, and aesthetics. That maturation should alteration the institution to proceed expanding its dividend.

The remainder of its apical holdings diagnostic akin characteristics. They besides wage high-yielding dividends they've accrued astatine steadfast rates for galore years. That maturation seems apt to continue since they besides person strong fiscal profiles and maturation prospects.

Because the Schwab U.S. Dividend Equity ETF's holdings thin to person higher dividend yields, the money currently offers an charismatic income stream. Its organisation output implicit the trailing 12 months is 3.6%. Meanwhile, the existent output is adjacent higher astatine 3.8%, acknowledgment partially to the 7% diminution successful the ETF's terms owed to the banal marketplace sell-off.

To enactment that output into perspective, each $100 invested into the ETF would nutrient astir $3.80 of dividend income each twelvemonth astatine the existent payout level. That compares to astir $1.35 of yearly dividend income for each $100 invested into an S&P 500 scale money astatine its existent yield.