Meet the Dividend ETF With Big Stakes in These 3 Blue Chip Stocks
2026-10-15 18:45
•Ben Gran •The Motley Fool
••••••••• •••• Axe Cap view
Schwab’s Dividend ETF and What It Means for SA Investors
A U.S. dividend ETF offers insights on stability and risk, with possible parallels in our local market.
The Schwab U.S. Dividend Equity ETF (SCHD) leans heavily on Coca-Cola, Chevron, and Home Depot—three very different companies that anchor its 3.24% yield. Coca-Cola’s steady consumer staples business is a reminder that some demand is shockproof, no matter the economic cycle. Chevron’s energy exposure fits well given global supply tightness, something South African investors should watch closely through Sasol and the rand; when oil profits rise, so does SASOL’s foreign earnings and, by extension, the budget for dividends. Home Depot’s struggles reflect rising global interest rates squeezing housing markets—a story South African banks like FirstRand and Nedbank will feel indirectly if credit slows further here. SCHD’s ultra-low fees and diversified 100+ stock portfolio offer a nice balance but beware of the U.S. interest rate path; a quick rate cut could boost HD and domestic lenders, while sustained high rates may pressure them. For local investors, this fund hints at mixing steady dividend payers with cyclical names, something worth remembering on the JSE. this is just our opinion and not financial advice
In South Africa, buy Sasol and cap banks like FirstRand on dips for dividend income, but trim exposure if global rates spike further. Avoid homebuilder or property-linked counters until evidence of a housing recovery. Use USD/ZAR as a hedge since rand volatility tightly ties to oil and interest rate outlooks.
- Sasol
- FirstRand
- USD/ZAR
- U.S. interest rates remain high longer than expected
- Rand weakness erodes offshore earnings translated in ZAR
6/10
The Schwab U.S. Dividend Equity ETF (SCHD) offers a diversified dividend-focused portfolio with a 3.24% yield and low 0.06% expense ratio. The fund's three largest blue chip holdings—Coca-Cola, Chevron, and Home Depot—represent about 12.3% of the portfolio. While Coca-Cola and Chevron show strong fundamentals, Home Depot has struggled due to rising interest rates and housing market slowdown, though it may recover as a long-term investment.
Our take is based on reporting first published by The Motley Fool.