Between 2012 and 2025, the Schwab U.S. Dividend Equity ETF (SCHD) ended just three calendar years in the red, including the dividends it paid, and none of those losses were large — the worst year being 2018 with about a 5.5% decline. In 2022 the fund fell about 3% while the S&P 500 declined around 18% including dividends. That sort of record is a big reason income investors like the fund.
The Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index, which selects companies with at least 10 straight years of dividend payments. From this group, the index favors high-yielding stocks that score well on cash flow relative to total debt, return on equity, dividend yield, and five-year dividend growth. This rule left some of 2022’s biggest losers out completely; Amazon, Tesla and Meta Platforms didn’t pay dividends that year.
The fund’s holdings still tilt toward defensive sectors. As of June 30, healthcare and consumer staples together made up about 41% of the portfolio, while tech stocks represented roughly 9%, compared with about 37% for the broader Schwab U.S. Large-Cap ETF. Also, the dividend fund’s holdings were cheaper, at around 20 times earnings as of Aug. 31, versus around 25 times for the broader large-cap fund.
Schwab’s published yearly returns show the three losing years were 2015, 2018 and 2022. The 2015 loss hardly counts, dipping 0.2% in a year the S&P 500 rose about 1.4%.
In 2018, the fund’s 5.5% fall was slightly worse than the S&P 500’s 4.4% drop.
In other words, in two of its three losing years, the fund didn’t outperform the overall market. The year that arguably made its reputation was 2022, when it fell about 3% while the S&P 500 declined around 18%.
It’s also worth noting that a full-year return can mask a rough spell within the year. The fund’s worst quarter was the first three months of 2020, when it dropped around 22%. It still ended 2020 up about 15% for the year.
From 2023 through 2025, SCHD returned about 5%, 12% and 4% while the S&P 500 returned about 26%, 25% and 18%, respectively. Compounded, that’s a total gain of about 22% for the fund over those three years, versus about 86% for the index.
Even with 2022’s smaller loss, the index finished well ahead. The fund’s total gain from 2022 through 2025 was about 18%, but the S&P 500’s was about 52% over that period.
Over all 14 years, $10,000 in the fund would have turned into about $49,000 with dividends reinvested. The same amount in the S&P 500 would have hit around $70,500.
2026 has gone the other way. As of this writing, the fund is up around 24% in 2026 with dividends, while the S&P 500 is up about 14%.
The fund’s leadership in 2026 has been aided by energy stocks, which comprised roughly 14% of the portfolio as of June 30. Chevron and ConocoPhillips, two of its 10 largest holdings, have each gained more than 40% this year with dividends. Its largest holding, Texas Instruments, is up almost 70%.
Historically, the fund’s strength has been how little it lost in its bad years, rather than how rarely it lost, and a steady flow of dividends. The approach may suit investors who prioritize smaller declines in tough years and income, but it tends to lag when markets rise quickly.
In the view of the analysis presented, SCHD can be a sensible long-term component for investors who value downside protection and dividend income, but it is not likely to outperform in strong bull markets. The takeaway is to consider pairing SCHD with a broad index fund to balance potential lag during rising markets.
