SCHD's quality-focused dividend strategy has outperformed the S&P 500 by nearly 17 percentage points in 2026, driven by a shift in market leadership toward value and away from tech-heavy growth.
The Schwab U.S. Dividend Equity ETF (SCHD) has delivered a 28.99% return through September 1, significantly outpacing the 12.31% gain of the SPDR S&P 500 ETF Trust (SPY). This performance gap highlights a broader market rotation away from large-cap growth stocks toward value and quality-oriented equities, as SCHD successfully avoids the Magnificent Seven while maintaining a low 0.06% expense ratio.
SCHD benefited from a market rotation away from large-cap growth stocks toward value and quality factors, sectors where the ETF maintains significant exposure, such as consumer staples, healthcare, and energy.
No, SCHD currently holds none of the Magnificent Seven stocks, which has been a primary driver of its performance divergence from the S&P 500 this year.