Projecting the Long-Term Trajectory of SCHD Through 2035

Key Considerations

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) has achieved a 13.4% annualized total return since its 2011 inception, with dividend payouts growing at an 11.2% compound annual rate since 2017. If this growth pace persists, the share price could expand from $35 to approximately $90 by 2035, while the yield on cost would rise from 3.1% to over 8% within the same period.

Below is an analysis of the factors supporting this projection.

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Leveraging High Income and Growth

The Schwab U.S. Dividend Equity ETF has demonstrated strong compounding performance, with share prices appreciating at an average 10% annual rate since inception. Coupled with its current 3.1% dividend yield, this results in a 13.4% annualized total return—remarkable for a lower-risk, dividend-focused strategy. A significant contributor to these returns has been its rapid dividend growth trajectory.

Assuming continued price growth exceeding 10% annually, the ETF could reach $90 per share by 2035, representing over a 150% increase. Simultaneously, if dividend growth maintains its historical 11%+ pace, annual distributions would rise from the current $1.05 per share to more than $2.90 by 2035, yielding over 8% on the original investment basis.

Several caveats merit consideration. SCHD tracks an index selecting 100 high-dividend-paying U.S. stocks, refreshed annually. The current portfolio has historically increased dividends at a 9.4% annualized rate over the past five years—slightly exceeding the preceding cycle’s 8.6% pace. Should future dividend growth decelerate, the 2035 income and price targets may not be realized.

Nevertheless, the ETF’s proven track record of identifying dividend-growth leaders that deliver both income and appreciation makes it a compelling core holding for long-term portfolio growth.

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