Tags: morningstar | schwab strategic trust | etf | dividend

Morningstar: Schwab Strategic Trust ETF Offers Steady Dividend Income Stream

Morningstar: Schwab Strategic Trust ETF Offers Steady Dividend Income Stream

(Dollar Photo Club)

By    |   Wednesday, 03 August 2016 08:18 AM

Morningstar Inc. is touting one of Charles Schwab Corp.’s exchange-traded funds that focuses on dividend payers as a safe bet to offer a steady income stream “that should grow with time.”

Schwab is now the fifth-largest U.S. ETF issuer as Schwab ETFs are among the least expensive on the market, Benzinga.com reports.

“In some segments, including both equities and fixed income, Schwab is able to undercut even Vanguard, the supposed low-cost leader of the fund world, on fees,” Benzinga reports.

Schwab Strategic Trust (NYSE: SCHD), which “charges a scant 0.07 percent per year, or just seven $7 on a $10,000 investment. No dividend ETF is less expensive,” Benzinga reports.

“Relative to its large-cap dividend-oriented peers, this fund will likely generate an income stream that is more stable and that should grow with time. This is reflective of the methodology of its underlying benchmark, which specifically targets high-quality, steady dividend payers, and is not — as some of competing funds' benchmarks are — tuned to isolate constituents exclusively on the basis of high current and/or prospective payouts or yields,” Morningstar said in a recent note.

SCHD, home to nearly $4.2 billion in assets under management, holds 114 stocks, all of which have raised dividends for at least 10 consecutive years. With a focus on dividend consistency and growth, SCHD's largest sector weight is consumer staples at over a quarter of the ETF's weight, Benzinga reported.

However, SCHD also has one of the largest allocations to technology stocks among all dividend ETFs at nearly 21.5 percent. “That is notable for multiple reasons, including tech's dividend ascent over the past few years and the sector's stout cash piles, which should ensure dividend growth going forward,” Benzinga reported.

Meanwhile, Morningstar said investors pulled an estimated $21.7 billion from actively managed funds that buy U.S. stocks in June, the biggest monthly withdrawal since October 2008, Bloomberg reported.

For the month, actively run funds of all types suffered redemptions of $30.2 billion while mutual funds and exchange-traded funds that mimic indexes attracted $29.2 billion. Actively run municipal bond funds attracted $6.3 billion, the only category among stock and bond pickers that managed inflows.

Top executives in the asset management business, including Larry Fink, chief executive officer at BlackRock Inc., and Gregory Johnson, head of Franklin Resources Inc., have warned that the shift into passive vehicles will continue, threatening the profit margins and future of many investment companies. Fink and others have predicted that the industry will be forced to consolidate to cope with the threat.

(Newsmax wire services contributed to this report).

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Morningstar Inc. is touting one of Charles Schwab Corp.'s exchange-traded funds that focuses on dividend payers as a safe bet to offer a steady income stream "that should grow with time."
morningstar, schwab strategic trust, etf, dividend
424
2016-18-03
Wednesday, 03 August 2016 08:18 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved