The Schwab U.S. Dividend Equity ETF (SCHD) has delivered a year-to-date return of approximately 27.92% through mid-August 2026, significantly outpacing the S&P 500’s 13.85% gain and marking one of the widest performance gaps in the fund’s history.
That 14-percentage-point advantage translates to a record outperformance for the dividend-focused ETF. Over the same period, the trailing one-year return tells a similar story: SCHD is up 30.88% compared to 20.37% for the S&P 500, a roughly 10.5-point lead. The month-to-month momentum has remained strong as well, with SCHD up 6.74% over one month versus 2.85% for the broader index.
The outperformance represents a dramatic reversal for SCHD, which spent much of the past three years underperforming as artificial intelligence and mega-cap technology stocks dominated market leadership. Many investors abandoned the fund during that period, rotating into broad index funds that gave them concentrated exposure to Nvidia, Microsoft, Apple, and Alphabet.
The Sector Rotation Driving the Win
The driver behind SCHD’s surge is a fundamental shift in market leadership away from mega-cap technology toward value and dividend-paying stocks. The Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index, which screens for cash flow quality and dividend growth rather than market capitalization, concentrating the fund in businesses that have been underweighted by the S&P 500’s cap-weighting methodology for years.
SCHD’s top holdings reflect the exact sectors leading the market in 2026. As of May 2026, the fund held Qualcomm at 6.74% of assets, Texas Instruments at 5.90%, and UnitedHealth Group at 5.09%, along with meaningful positions in energy stocks Chevron and ConocoPhillips, as well as healthcare and telecom names Merck and Verizon. These analog semiconductor, healthcare, energy, and telecom positions are precisely the pockets that have driven market gains this year as investors rotated away from the mega-cap technology concentration that defined 2023 and 2024.
Critically, SCHD holds zero exposure to Nvidia, Microsoft, Apple, or Alphabet—the four largest holdings in the S&P 500. When those names led, the index won decisively. In 2026, as market leadership broadened beyond mega-cap tech, the same concentration that once worked against SCHD holders has become a tailwind. The fund’s 0.06% expense ratio also preserves more of that outperformance for shareholders compared to SPY’s 0.09% fee.
The rotation reflects broader market dynamics. Early 2026 saw large value stocks outperform large growth stocks by more than 11 percentage points year-to-date, according to market analysis from StoneX. This value comeback follows a decade of growth dominance and has been supported by lower interest rates, stretched technology valuations, and strong corporate cash flows in dividend-paying sectors. SCHD’s dividend yield of roughly 3.2% to 3.35% on a trailing twelve-month basis also exceeds the S&P 500’s yield of closer to 1.2%, providing additional income for investors seeking passive returns.
Long-term performance context matters as well. Over the past 10 years, SCHD has returned 239.6% compared to 256.18% for the S&P 500, meaning the index still wins that race. However, the deficit has narrowed sharply in 2026, and anyone who exited SCHD near recent lows gave up the entire catch-up move. The fund’s $94.9 billion in assets and diversification across more than 150 positions provide stability, though the fund remains distinctly value-tilted and lacks exposure to the mega-cap technology names that could reassert leadership if artificial intelligence capital spending reaccelerates.
Sources
- 24/7 Wall St. — SCHD’s year-to-date return of 27.92% through August 14, 2026, S&P 500 return of 13.85%, top holdings breakdown, and sector rotation analysis
- TradingView — SCHD’s yearly performance of 27.34% increase and recent price data
- StoneX — Large value outperformance of large growth by more than 11 percentage points year-to-date in 2026
- ALREADY_RETRIEVED search results — SCHD dividend yield of 3.09%, market cap of $112.12B, and general fund characteristics
