For about three years, people in my comments called SCHD a "dog."
Dead money.
"Sell it and buy literally anything else." I bought it every single month through all of it. Today I own about 2,350 shares of the Schwab U.S.
Dividend Equity ETF, and I'm not selling a single one.
This is the honest case for the most boring position I own — why it actually lagged, why I never flinched, and the real reason a boring ETF matters this much to me.
Here's the full breakdown on video, and the written version is below it.
Yes, SCHD really did underperform — I'm not going to spin it
Let's start with the criticism, because it was fair. While everybody else rode the AI mega-caps to the moon, SCHD just sat there. In 2025, SCHD returned roughly 4% while the S&P 500 returned about 18%. And it wasn't a one-year fluke — across 2023 through 2025, SCHD averaged around 7% a year while the S&P averaged closer to 23%. Put that on a hundred grand and SCHD turned it into about $122,000 while the S&P turned it into about $186,000. That's a sixty-thousand-dollar gap, and I'm not going to pretend it didn't sting.
There was even a moment that drove dividend investors crazy. SCHD follows a strict rule book, and in 2024 those rules forced it to sell Broadcom right as Broadcom was exploding on AI, swapping in a slower-moving pharma name. People lost their minds. So if you were one of the folks calling SCHD a dog, on paper, you had a point.
Why I kept buying anyway — my investing DNA
Here's the thing, though. I didn't sell. I didn't even slow down. I bought SCHD every few weeks, straight through the worst of it. And the reason comes down to something it took me about thirty years of investing to actually learn: you have to follow your own plan.
Everybody is on a completely different journey. We've all got our own investing DNA. The folks panic-selling SCHD to chase the rocket — that's their DNA, and maybe it's right for them. It's not mine. My DNA wants a reliable, growing paycheck that shows up every ninety days, that I never have to babysit, that I don't have to think about when the market gets scary. That's what lets me sleep, and it's exactly the role SCHD plays inside my three-bucket portfolio framework, where every investment has one specific job. The cost of abandoning your plan to chase whatever's hot is the same mistake that's humbled far better investors than me — I wrote about that in how FOMO burned Stanley Druckenmiller. So when the comments told me to sell, I didn't hear good advice. I heard people with different DNA than mine, making the right move for them. The noise doesn't get a vote.
How SCHD is actually built (and why I never worry)
Let me show you why I can ignore all that noise and still sleep fine, because this is the part most people holding SCHD can't even explain. SCHD isn't a manager picking stocks on a hunch. It's a rule book. It tracks the Dow Jones U.S. Dividend 100 Index, and the rules are strict.
It starts with around 2,500 U.S. companies. The first thing it does is throw out anyone who hasn't paid a dividend for ten straight years — that single screen kills all the flaky, unproven stuff. Then it scores who's left on quality: cash flow versus debt, return on equity, dividend yield, and how fast they've grown that dividend over five years. It keeps the best 100, reshuffles them every quarter, and rebuilds the whole list every March — all for an expense ratio of 0.06%, which is six dollars a year on ten grand.
But here's the line that matters most to me: no human emotion gets involved. The machine follows the rules and tunes out the noise. That is exactly what I'm doing when I ignore the haters and stick to my plan. The ETF and I are running the same playbook — follow the system, ignore the panic. And that boring, emotionless discipline has grown more than five times over since 2011 (as of 2026).
The snowball nobody talks about
Now the part that actually gets me excited about something this boring. SCHD is the only position in my entire portfolio where I reinvest the dividends. Everywhere else, the dividends and distributions pay out and I use that cash to build new positions. But SCHD? I let it eat.
Every quarter, the dividend automatically buys me more shares. Those new shares pay their own dividends next quarter, which buy even more shares. It's a snowball, and I never have to push it — it rolls itself. I'm at about 2,350 shares right now, and my system is simple: each year I add enough to land on a round number, with the aim of crossing 3,000 shares by the end of 2026. The beautiful part is that the snowball does part of that work for me. The bigger it gets, the more it throws off, the faster it grows itself. That's the magic of boring. Boring compounds.
Where SCHD stops — the honest ceiling
Let me be straight with you, because the SCHD cheerleaders won't be. SCHD by itself is not getting me to my goal of $10,000 a month in passive income — not without a giant mountain of money already in place. The yield is great for what it is, roughly three times what the S&P pays you (as of 2026), but to throw off ten grand a month at that rate you're talking millions invested. SCHD alone doesn't get a regular person there.
So SCHD isn't the engine. It's the foundation. To actually hit that number, I mix in higher-income plays on top — covered-call ETFs that pay out a lot more, like the one I broke down in why I own 200 shares of QQQI, plus JEPQ. Every investment has a job. Those income funds are the accelerator. SCHD's job is to be the boring, bulletproof floor that everything else stands on. You don't build a house starting with the chandelier. You start with the foundation.
The real reason a boring ETF matters this much to me
Here's the part I really wanted to get to. I could probably be a lot closer to that passive-income number right now. If I'd taken the money I poured into launching my brand, GLZD, and just dropped it into SCHD and these income ETFs instead, I'd be further down the road on paper. No question. I gave that up on purpose.
Because here's how I see it. Someone with a steady nine-to-five can throw money at a risky stock and not lose a wink of sleep — their paycheck is the safety net underneath them. I don't have that net. My businesses are my risk. So my biggest, riskiest bet isn't a stock at all. It's me.
And if GLZD becomes what I believe it can become, I don't inch toward that goal — I blow past it. SCHD is the calm, boring, shows-up-every-quarter foundation that lets me go all in on the un-boring thing: betting on myself. It's the fortress that lets me leave the walls and go take the castle. That's why I'll never sell a share.
Frequently asked questions
Why did SCHD underperform the S&P 500?
SCHD underperformed mainly because it's a value-tilted dividend fund that is deliberately underweight the high-growth tech names that drove the market. When the AI mega-caps led the S&P higher in 2023–2025, SCHD's quality-dividend rules kept it out of much of that rally — including forcing a sale of Broadcom in 2024 right as it surged. The trade-off is that the same rules also make it more defensive when those high-flyers fall.
Is SCHD a good long-term investment?
For an investor who wants a growing, reliable dividend and a more stable, value-oriented holding, SCHD has been a solid long-term core position, returning more than five times your money since its 2011 launch (as of 2026). It is not designed to beat a roaring growth market year to year. The honest answer is that it depends on your goals — SCHD is built to be a foundation, not a home-run swing.
What index does SCHD track, and how are its holdings chosen?
SCHD tracks the Dow Jones U.S. Dividend 100 Index. It starts from roughly 2,500 U.S. companies, screens out any that haven't paid a dividend for ten consecutive years, then scores the rest on cash flow to debt, return on equity, dividend yield, and five-year dividend growth. The top 100 make the cut, rebalanced quarterly and reconstituted each March — all rules-based, with no human stock-picking.
Can you live off SCHD dividends?
You can, but it takes a large amount of capital. With a yield around three times the S&P 500's (as of 2026), generating $10,000 a month in dividends from SCHD alone would require millions of dollars invested. Most people pair SCHD as a stable base with higher-income funds to lift the overall yield rather than relying on SCHD by itself.
Should you reinvest SCHD dividends?
Reinvesting (a DRIP) turns SCHD into a compounding snowball — each dividend buys more shares, which pay more dividends, which buy more shares. If you're still in the accumulation phase and don't need the income yet, reinvesting accelerates your share count over time. If you need the cash flow now, taking the dividend makes more sense.
Disclaimer: I am not a financial advisor or a licensed investment professional. This article is for educational and entertainment purposes only and reflects my personal opinions and my own portfolio decisions as of the date of publication. Nothing here is financial advice or a recommendation to buy or sell any security. Always do your own research and consult a licensed professional before making any investment decisions.