This Dividend ETF Yields 3.2% and Is Beating the Nasdaq-100 This Year
2026-07-18 12:23
•Daniel Sparks •The Motley Fool
••••••••• ••••••••••••• Axe Capital view
Dividend Resilience Beats AI Hype in 2026
SCHD ETF’s 3.2% yield and sector focus outshine growth-heavy Nasdaq for now.
The recent run in the Schwab U.S. Dividend Equity ETF (SCHD), returning about 20% this year, underscores a simple lesson for South African investors: steady income from quality companies still matters. This ETF avoids flashy tech names like Nvidia and Microsoft, which have dominated headlines but stumbled recently due to sky-high valuations and uncertain AI bets. Instead, SCHD leans heavily on healthcare and consumer staples—sectors that the local JSE can relate to through companies like Aspen Pharmacare or Shoprite, which benefit from stable demand. For rand investors, the USD/ZAR rate is critical; a stronger rand could boost returns on offshore dividend payers but pressure export-heavy sectors. If you’re tempted by momentum in AI stocks, remember that such market rotations can reverse quickly. I’d watch SCHD-like resilience play and tilt toward local dividend payers with robust fundamentals. This view could be wrong if tech rebounds sharply or if USD weakens more than expected, cutting offshore returns. this is just my opinion and not financial advice
Buy JSE dividend payers with good cash flow like Shoprite and Aspen, and consider hedged exposure to quality offshore dividend funds. Avoid chasing expensive growth stocks until valuation resets stabilize.
- Shoprite
- Aspen Pharmacare
- USD/ZAR
- Tech sector resurgence
- Rand depreciation impacting local companies with imported costs
7/10
The Schwab U.S. Dividend Equity ETF (SCHD) has returned approximately 20% in 2026, outperforming both the S&P 500 and Nasdaq-100. The $95 billion fund focuses on companies with at least 10 consecutive years of dividend payments and screens for quality fundamentals. Its concentration in healthcare and consumer staples has benefited from a market rotation away from expensive AI and software stocks, though the fund's long-term job is delivering growing income from durable businesses rather than outrunning growth indexes.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Daniel Sparks
Categories: Rates, Equities, Capital Returns, Technology, AI, Semiconductors, Healthcare, Consumer, Retail
Tickers: SCHD, UNH, HD, ABT, NVDA, MSFT, GOOG, GOOGL, GOOGM, GOOGN, KO, PG, CVX
Sentiment: Mixed - The fund has delivered strong 2026 returns of ~20%, outperforming major indexes, maintains a solid 3.2% yield, charges low expenses (0.06%), and has compounded at ~13% annually since inception. The article presents it as a reliable income generator with quality screening mechanisms. Listed as one of the fund's top three holdings at ~4.3-4.5% of assets, benefiting from the fund's strong performance and market rotation toward healthcare.
Keywords: dividend ETF, SCHD, market rotation, AI stocks, dividend yield, healthcare, consumer staples
Insights:
- SCHD: Positive: The fund has delivered strong 2026 returns of ~20%, outperforming major indexes, maintains a solid 3.2% yield, charges low expenses (0.06%), and has compounded at ~13% annually since inception. The article presents it as a reliable income generator with quality screening mechanisms.
- UNH: Positive: Listed as one of the fund's top three holdings at ~4.3-4.5% of assets, benefiting from the fund's strong performance and market rotation toward healthcare.
- HD: Positive: One of the fund's largest holdings at ~4.3-4.5% of assets, contributing to the fund's outperformance.