1 week ago
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Geoffrey Seiler, The Motley Fool
Tue, April 14, 2026 astatine 7:20 AM CDT 4 min read
While the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is 1 of the astir fashionable exchange-traded funds (ETFs) around, immoderate radical whitethorn not recognize it tracks the Dow Jones U.S. Dividend 100 Index.
However, the scale it follows isn't similar the S&P 500, which occasionally adds and subtracts caller members passim the year. Instead, the Dow Jones U.S. Dividend 100 Index undergoes a ample yearly reconstitution each twelvemonth successful March, and the 1 for 2026 that conscionable happened greatly shifted the ETF's portfolio.
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The yearly reconstitution is intended to guarantee that the scale isn't falling into immoderate worth traps oregon situations wherever an scale subordinate could beryllium astatine hazard of cutting its dividend. While the index's absorption is connected dividend stocks, it takes into information a stock's dividend output and dividend growth, and it besides looks for a beardown equilibrium expanse and operational efficiency. That's wherefore metrics similar a company's escaped currency travel to full indebtedness ratio and instrumentality connected equity (ROE) play large roles successful determining which stocks are added to oregon removed from the index.
The March 2026 reconstitution, meanwhile, looks similar 1 of the index's biggest ever. The scale has historically seen portfolio turnover of 8% to 15% with its March reconstitution. Turnover jumped to 19% past year. For 2026, it was a whopping 31%, arsenic the scale added 25 caller stocks and removed 22.
Interestingly, the scale saw a large reversal successful its vigor exposure. Last year, it accrued its vigor assemblage vulnerability from astir 12.3% to astir 21%, portion this twelvemonth it took it down from 23.5% to 16.3%. The vigor assemblage has been blistery to commencement the year, truthful Schwab U.S. Dividend Equity ETF is lowering its vulnerability aft immoderate bully gains. Meanwhile, healthcare and exertion were the biggest gainers this year.
Below are the ETF's assemblage weightings earlier and aft the adjustments.
| Healthcare | 15.4% | 18.9% | 3.6 pp |
| Technology | 7.8% | 11.2% | 3.4 pp |
| Communication services | 4.7% | 7% | 2.3 pp |
| Consumer staples | 18.3% | 19.4% | 1 pp |
| Financials | 0.1% | 8.9% | 1 pp |
| Utilities | 16.2% | 0% | 0 pp |
| Industrials | 12.1% | 11.8% | (0.3 pp) |
| Consumer discretionary | 7.3% | 6.4% | (0.9 pp) |
| Materials | 3% | 9% | (3 pp) |
| Energy | 23.5% | 16.3% | (7.1 pp) |
Data source: Schwab Asset Management.
Meanwhile, the scale removed immoderate large holdings, including 2 that were antecedently successful its apical 10: drugmaker AbbVie and networking institution Cisco Systems. Health insurer UnitedHealth Group was its biggest caller addition, followed by drugmaker Abbott Labs and user staple elephantine Procter & Gamble.
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