Schwab Dividend ETFs for Global Stock Investment

The Schwab International Dividend Equity ETF (SCHH) tracks a dividend-focused index of international stocks, offering a low-cost way to invest in global dividend-paying companies.

This ETF holds over 400 stocks from developed and emerging markets, providing broad diversification and potential for regular income.

The Schwab U.S. Dividend Equity ETF (SCHD) focuses on dividend-paying US stocks, tracking an index of high-yielding companies with a history of consistent dividend payments.

By investing in these ETFs, you can gain exposure to a diversified portfolio of dividend-paying stocks from around the world, potentially generating regular income and long-term growth.

The FTSE All-World High Dividend Yield index has 2,165 constituents, with a straightforward selection method based on expected dividend yield for the next 12 months. This index is the largest available dividend index and aims to reflect 50 percent of its parent index, the FTSE All-World index.

Index rebalancing for the FTSE All-World High Dividend Yield index takes place semi-annually in March and September, and the index is weighted by free float market capitalization. The S&P Global Dividend Aristocrats index, on the other hand, has a more selective approach, requiring companies to have at least 10 consecutive years of a controlled dividend policy with rising or stable dividend payments.

Here's a comparison of the three indexes' rebalancing frequencies:

These indexes have different rebalancing frequencies, which can impact their performance and suitability for different investment strategies.

The methodologies behind various dividend indices are quite fascinating. The FTSE All-World High Dividend Yield index rebalances semi-annually in March and September.

Each index has its unique selection criteria. The S&P Global Dividend Aristocrats, for example, focuses on stocks with a controlled dividend policy and rising or stable dividends for at least 10 consecutive years.

The MSCI World High Dividend Yield ESG Reduced Carbon Target Select index, on the other hand, selects stocks based on quality factors, dividend yield, and ESG criteria. It includes 177 companies, with a dividend yield of at least 30% above the average of the underlying index.

Here's a comparison of the indices' methodologies:

The SG Global Quality Income index, meanwhile, focuses on quality factors, balance sheet valuation, and dividend yield, with an equal weighting of its 75 constituents. The STOXX Global Select Dividend 100 index, on the other hand, selects stocks based on dividend quality, non-negative payout ratio, and indicated dividend yield, with a weighting based on dividend yield.

The FTSE All-World High Dividend Yield index tracks high dividend stocks from developed and emerging economies worldwide.

The index has 2,165 constituents (as of 28.06.24), making it the largest available dividend index.

The selection method is based on the expected dividend yield for the next 12 months, and the selected companies are weighted by their free float market cap.

The index is part of the FTSE All-World index, excluding REITs, which comprises 4,291 constituents (as of 28.06.24).

The index is rebalanced semi-annually in March and September, ensuring that the selected companies continue to meet the high dividend yield criteria.

Here is a summary of the key facts about the FTSE All-World High Dividend Yield index:

The FTSE All-World High Dividend Yield index aims to reflect 50 percent of the parent index, providing a comprehensive view of high dividend stocks worldwide.

The WisdomTree U.S. High Dividend Fund (DHS) is a great option for those seeking a high dividend yield. It mimics the WisdomTree High Dividend Index, which features companies ranked by dividend yield.

The fund's net assets as of November 20, 2024, were $1.21 billion, and its expense ratio is a relatively low 0.38%. The distribution yield over the past 12 months is 2.57%.

The fund's holdings are well diversified across various sectors, including real estate, healthcare, utilities, IT, and consumer staples. Its top holdings include Exxon Mobil Corp, Altria Group Inc, AbbVie Inc, Chevron Corp, and International Business Machines Corp.

The fund has a history dating back to its inception on June 16, 2006, and its current price as of November 20, 2024, is $98.03.

Schwab's dividend ETFs offer a range of investment strategies to suit different goals and risk tolerances.

For conservative investors, Schwab's high-dividend ETFs, such as the Schwab U.S. Dividend Equity ETF (SCHD), can provide a steady stream of income and lower volatility.

By investing in a diversified portfolio of high-dividend stocks, investors can potentially reduce their risk and increase their returns over the long term.

Dividend-focused ETFs like SCHD have historically outperformed the broader market during times of economic stress, making them an attractive option for investors seeking stability.

Investing in global stock markets can be a solid way to earn regular income, especially during times of low interest rates. Dividend stocks are often paid by profitable and established companies.

If you're seeking regular income, you might want to consider investing in high-dividend-yielding stocks. These stocks usually have a track record of paying out consistent dividends.

There are different index concepts available for investing in global high-dividend equities. This includes ETFs that track indices on global dividend stocks.

The Global X SuperDividend ETF (SDIV) is one such example. It tracks an index of 100 equally weighted companies that rank among the highest-dividend payers around the world.

Some of the main holdings of the Global X SuperDividend ETF include Yue Yuen Industrial Hldg, Kinetik Holdings Inc, and HKBN Ltd. These companies are known for their high dividend yields.

If you're looking for income from your holdings, regular dividend payments are key. Some ETFs even manage to pay out dividends on a monthly basis, providing more frequent income for investors.

Here are some key statistics about the Global X SuperDividend ETF:

Derivative income strategies are a way for investors to generate incremental income by selling call options on ETFs that track equity markets. These funds, often named with terms like "buy-write" or "option income", provide exposure to the market while also writing call options on their underlying portfolios.

Most of these funds write options that expire monthly, but some write options that expire each day. This can result in a steady stream of income for investors.

The type of income a fund produces can make a big difference when it comes to taxes. Generally, investment funds generate two main types of taxable income: ordinary income and tax-advantaged income.

Ordinary income is taxed at the same rate as wages, ranging from 10% to 37%.

The Dow Jones U.S. Dividend 100 Index has seen investment growth over 10 years, but past performance is no guarantee of future results.

Performance of covered-call ETFs can be affected by higher expense ratios, which can drag on returns. The average expense ratio of ETFs in the Derivative Income Category is 0.47%, significantly higher than other categories.

ETFs in the Derivative Income Category, such as covered-call ETFs, are often taxed at higher ordinary income tax rates, resulting in a larger tax drag on returns, especially for those in higher tax brackets.

Derivative income funds generally perform well in flat to modestly bullish markets, often reporting higher-than-average yields due to selling options and delivering premiums along with dividends earned on stocks to investors.

In these scenarios, they tend to outperform traditional long-only strategies that haven't sold options. For instance, in 2020, the Dow Jones U.S. Dividend 100 index generated total returns of over 15%, while the S&P 500 Dividend Aristocrats Dynamic Coverage Covered Call index produced total returns of just 5.6%.

However, in rapidly rising markets, covered-call funds typically underperform traditional strategies, as it's more likely that the call options they've sold will be exercised, capping their returns on the upside.

Over longer time periods, the impact of missing the upside can be seen clearly, as the Dow Jones U.S. Dividend 100 index significantly outperformed the S&P 500 Dividend Aristocrats Dynamic Coverage Covered Call index from 2013 to 2023.

In fact, in 2018, the Dow Jones U.S. Dividend 100 index lost 5.4% while the S&P 500 Dividend Aristocrats Dynamic Coverage Covered Call index lost 4.3%, showing that covered-call funds may perform less poorly than long-only strategies in down markets, but still generate losses in tandem with the overall market.

The Dow Jones U.S. Dividend 100 Index has shown impressive investment growth over 10 years, as of 5/15/2024.

This index is designed to measure the performance of high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends. The S&P 500 Dividend Aristocrats Dynamic Coverage Covered Call Index also measures performance, but with a twist - it combines a long position in the S&P 500 Dividend Aristocrats NTR with a short position in a standard S&P 500 monthly call option.

Investors should carefully review the prospectus and understand the investment objectives, risks, charges, and expenses before investing in Schwab dividend ETFs.

Investing involves risk, including loss of principal.

Past performance is no guarantee of future results.

Dividend-focused funds may underperform funds that do not limit their investment to dividend-paying stocks.

Covered calls provide downside protection only to the extent of premiums received, and prevent any profitability above the strike price of the call.

Options carry a high level of risk and are not suitable for all investors.

The Dow Jones U.S. Dividend 100 Index is designed to measure the performance of high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends.

The S&P 500 Dividend Aristocrats Dynamic Coverage Covered Call Index is designed to measure the performance of a long position in the S&P 500 Dividend Aristocrats NTR and a short position in a standard S&P 500 monthly call option.

When choosing Schwab dividend ETFs, it's essential to consider the range of options available. There are many monthly dividend ETF funds offered by major firms like State Street Global Advisors, Vanguard Group, and BlackRock.

You should do your due diligence and review the ETF for its expenses and risk. Pay attention to expense ratios, as the less money that goes into a manager's pocket, the better.

Some fund managers may offer high double-digit yields that they cannot sustain to attract investors, so be cautious of these offers.

The SG Quality Income Factsheet is a solid investment option for those seeking dividend income. It's constructed by Société Générale and calculated by Solactive.

The index consists of 25 to 75 dividend stocks from developed countries worldwide, excluding financials. This gives investors a focused portfolio with a clear investment strategy.

Stock selection is based on dividend yield, quality factors, and balance sheet valuation. The dividend yield must be at least 4% to be included in the index.

The index rebalances on a quarterly basis, ensuring that the portfolio remains up-to-date and aligned with the investment strategy. This regular rebalancing also helps to maintain the quality of the stocks in the index.

Here's a breakdown of the regions covered by the SG Quality Income Factsheet:

This investment option is ideal for those seeking a regular income stream and willing to take on some level of risk. By focusing on dividend stocks from developed countries, the SG Quality Income Factsheet provides a stable and predictable income stream.

There are many monthly dividend ETF funds available from major firms like State Street Global Advisors, Vanguard Group, and BlackRock, as well as smaller firms like Global X Funds.

Investors should do their due diligence and review the ETF for its expenses and risk, because getting dividend income every month may not be as appealing as it sounds when you consider the costs involved.

Fund managers may offer high double-digit yields to attract investors, but these yields are often unsustainable and should be a red flag.

Expense ratios are crucial to consider, as they directly affect the amount of money that goes into a manager's pocket.

Some funds may return high income through the use of leverage, which may not suit the risk tolerance of all investors.

If you're looking for other high-yielding investments, consider exploring dividend ETFs, which can offer above-average distribution yields.

The Vanguard Dividend Appreciation ETF (VIG) is one such option, known for its focus on dividend-paying stocks with a history of consistent dividend growth.

Dividend ETFs like Fidelity International High Dividend ETF (FIDI) and iShares Core High Dividend ETF (HDV) also tend to have attractive yields.

For a more global approach, you might look into the SPDR S&P Global Dividend ETF (WDIV), which invests in dividend-paying stocks from around the world.

Alternatively, the Schwab U.S. Dividend Equity ETF (SCHD) offers a more focused approach, concentrating on U.S.-based dividend-paying stocks.

Here are some of the most popular high-yielding dividend ETFs to consider:

ETF dividends are taxed similarly to how dividends on stocks are taxed.

Qualified dividends are taxed as capital gains, which are taxed at either 0%, 15%, or 20%, depending on the holder's income.

To qualify, the ETF must be held for more than 60 days before the dividend is issued.

Non-qualified dividends are taxed as ordinary income; the tax rate will depend on the holder's income tax bracket.

Tax rates for qualified and non-qualified dividends can be found in the Internal Revenue Service's Publication 550, Investment Income and Expenses (Including Capital Gains and Losses).

ETF dividends are taxed similarly to how dividends on stocks are taxed. This means they depend on whether they are qualified or non-qualified dividends.

Qualified dividends are taxed as capital gains, which are taxed at either 0%, 15%, or 20%, depending on the holder's income. The key factor here is that the ETF must be held for more than 60 days before the dividend is issued.

To qualify for the more beneficial tax rate, you need to hold the ETF for at least 60 days. This is a relatively short period, but it can make a big difference in how much you pay in taxes.

Non-qualified dividends are taxed as ordinary income, and the tax rate will depend on the holder's income tax bracket. This means you'll pay a higher tax rate on non-qualified dividends compared to qualified dividends.

Here's a summary of the tax rates for qualified and non-qualified dividends:

Schwab offers $0 online commission per trade on over 3,000 U.S. exchange-listed ETFs. This is a significant advantage for investors looking to minimize their trading costs.

Many investors are unaware that some brokerages charge high commissions for trading stocks, but Schwab's $0 commission policy helps to level the playing field.

Schwab's $0 online commission on U.S. exchange-listed ETFs is just one of the many ways the company is working to make investing more affordable and accessible to everyone.

Investors can take advantage of this policy by trading over 3,000 U.S. exchange-listed ETFs online without incurring any commission fees.