Energy Stocks Comprise 17% of This Top Dividend ETF. Here's Why.
Key takeaways
- That's especially true with dividend ETFs, including the Schwab U.S.
- In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
- Of course, that works for investors when energy equities are rallying, as has been the case this year.
That's especially true with dividend ETFs, including the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). A $96 billion behemoth, this ETF is the second-largest fund in its category and allocates 16.9% of its portfolio to energy stocks. The Schwab ETF's energy exposure is high compared to some competing ETFs and more than 5x the weight assigned to that sector by the S&P 500.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Of course, that works for investors when energy equities are rallying, as has been the case this year. This dividend ETF is up nearly 19% year to date, trouncing the S&P 500 and its larger, less energy-exposed rival in the process. That's good enough for some investors, but some inquiring minds want to know why this ETF leans heavily into the energy sector. Fortunately, it's easy to explain.