6 Dividend Aristocrats Bolster SCHD's Income Stream This Year

The Schwab U.S. Dividend Equity ETF (SCHD) pays a quarterly distribution from roughly 100 quality-screened U.S. dividend stocks. The fund holds $71.6 billion in assets at an expense ratio of just 0.06%, and it tracks the Dow Jones U.S. Dividend 100 Index.

The Six Core Stocks

The fund relies on six Dividend Aristocrats—companies that have raised dividends for decades. These are:

• AbbVie (ABBV): Biopharmaceutical company.
• Merck (MRK): Pharmaceutical company.
• Coca-Cola (KO): Beverage company.
• Lockheed Martin (LMT): Defense contractor.
• Chevron (CVX): Energy company.
• Verizon (VZ): Telecommunications company.

Their Role in the Fund

These stocks contribute to the stability of the fund's cash distributions due to their long history of dividend payments. The Dow Jones index requires at least 10 consecutive years of dividend payments and screens for cash flow sustainability.

What This Means for Investors

Focusing on Dividend Aristocrats provides a defensive strategy for income-seeking investors. However, the fund's performance depends on these companies continuing to raise dividends, which may be affected by market conditions.