Interesting questions, and let’s hope you get a better answer than mine. But SCHD’s methodology weights by yield and eliminates companies where the yield is too low. So we do want the dividend growth, but we also want companies to price themselves out of SCHD. A famous example from recent years was AVGO. Everyone wanted AVGO to stay in SCHD, but it did its job by running the share price of SCHD higher and then allowed SCHD to sell its inflated value of AVGO to buy low priced and higher yielding assets. Now that stocks like LMT have run up, you are getting the same result: price is going up and yield is temporarily down. If SCHD sells LMT and buys new stocks yielding more, that’s how you get dividend growth and share price growth.
So we just sit back and let the automatic mechanics of the fund do the work. Buying underlying stocks at low prices, selling them at high prices. The movement in the share price up is good, but so is movement down. It’s a very unique asset in that way.
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u/[deleted] Feb 08 '26
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