If you’ve been holding SCHD over the last 3 years, you’ve probably asked yourself this question at least once:
👉 “Why is everyone making money… except me?”
Because let’s be honest — while the S&P 500 exploded with 19% annualized returns, SCHD delivered only around 7.8% per year.
That’s a painful 11%+ gap, and yes… it matters.
But here’s the twist:
Most long-term investors are still holding SCHD — and surprisingly, that might be the smartest move you can make going into 2026.
Today, we break down the real reasons SCHD lagged, what changed, whether it’s still worth it, and when SCHD is likely to shine again.
Let’s cut through the noise. 🚀
First: SCHD Was Never a Growth ETF — And That Explains Everything
The biggest misunderstanding online:
❌ “Why isn’t SCHD growing like the S&P 500?”
✔️ Because SCHD is not a growth ETF.
SCHD is built for income, not explosive stock price movement.
Its job is simple:
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Provide reliable dividends
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Hold high-quality, stable companies
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Offer defensiveness during market downturns
It’s literally designed not to behave like the S&P 500.
And if you look at the data, the underperformance makes perfect sense:
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Tech stocks skyrocketed
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AI pushed growth names to insane levels
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SCHD barely holds tech
SCHD didn’t “fail”…
The market simply rewarded growth more than dividend stocks.
So… What Actually Changed Inside SCHD? 🔍
This part is rarely explained properly, but it matters.
1️⃣ Massive Increase in Energy Holdings ⚡
Energy used to be 5% of SCHD.
Now? Close to 20%.
Why?
Because everything AI-related — chips, cloud, data centers — requires insane amounts of energy.
Energy companies:
✔ Became more profitable
✔ Became more stable
✔ Scored higher on SCHD’s rules
So the index naturally shifted.
2️⃣ Financial Stocks Dropped Hard 📉
From 22% → around 9%
Banks suffered due to messy interest rates.
Dividend reliability dropped.
Balance sheets weakened.
SCHD’s formula quietly removed them.
No drama — just quality control.
3️⃣ Tech Exposure Fell From 16% → 8% 💻
And here’s the real reason:
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Meta? No dividend.
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Amazon? No dividend.
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Big tech? Focused on reinvesting, not paying shareholders.
SCHD only selects consistent dividend growers.
If tech doesn’t pay… SCHD doesn’t play.
So Has SCHD Become “Worse”?
Not at all.
It simply became:
➡ More defensive
➡ More value-focused
➡ More income-oriented
Different market = different SCHD.
And that’s normal.
Should You Still Hold SCHD in 2026? 🤔
This depends entirely on YOUR goals — not TikTok comments or YouTube hype.
✅ If you’re 5+ years away from retirement
SCHD still makes complete sense.
You get:
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Stable 3.5–4% dividend income
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Lower volatility
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A “zig when tech zags” stabilizer
✅ If your portfolio is heavy in tech (Nvidia, AMD, META, etc.)
SCHD is your anchor.
When tech dips — and it WILL dip — SCHD cushions the fall.
✅ If you’ve held SCHD for years
Your yield on cost is likely amazing.
Selling now resets everything.
But… SCHD Is Not Perfect for Everyone
❌ If SCHD is 80% of your portfolio
You’re missing growth.
Add something like:
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VUG (Growth)
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QQQM (Nasdaq)
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CHGG (Tech-focused growth ETFs)
❌ If you’re under 40 with a long horizon
You need growth + dividends.
SCHD alone won’t build maximum wealth.
❌ If SCHD no longer fits your goals
Alternatives include:
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VIG – dividend growers
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DGRO – balanced dividend + growth
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JEPI – higher monthly income
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SCHY – international SCHD version
Not better or worse — just different tools for different goals.
When Will SCHD Shine Again? 🌅
SCHD performs best when:
🌟 Interest rates start falling
Value + dividend stocks tend to outperform.
🌟 Tech cools down
Money rotates back into high-quality dividend payers.
🌟 During market corrections
SCHD is defensive and drops less.
Dividends keep paying even when prices fall.
Analysts already expect SCHD’s environment to improve in 2026.
So… Is SCHD Still Worth It in 2026?
Absolutely — IF it matches your goals.
SCHD:
✔ isn’t broken
✔ didn’t fail
✔ didn’t change its strategy
It’s still one of the best:
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Defensive
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Stable
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High-quality
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Income-focused
ETFs for long-term investors.
The real question isn’t:
❌ “Is SCHD good or bad?”
But rather:
✔️ “Is SCHD right for you?”
If yes, keep holding.
If not, rebalance.
That’s what smart investors do.
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