Among the top exchange traded fund (ETF) providers in the market, Schwab is an excellent choice for those looking for passive exposure to equities, fixed income assets, and a range of other securities.
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Schwab US Broad Market ETF (SCHB) tracks over 2,400 stocks with a 0.03% expense ratio and 1.1% dividend yield.
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Schwab US Large-Cap ETF (SCHX) holds the 750 largest US companies by market cap with a 0.03% expense ratio.
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Schwab US Dividend Equity ETF (SCHD) yields 3.7% and requires holdings to show at least a decade of dividend growth.
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This provider’s fund offerings are as vast as they are inclusive, covering nearly every index, sector, trend, and asset class investors can think of.
Of course, as we kick off a new year, investors who utilize Schwab as their ETF provider may be looking to narrow down their watch lists to a few top ETFs to choose from. Here are three top options I’m personally considering right now, and why I think these ETFs are options every investor could own (and probably should) over the long-term.
When most investors think of ETFs, they think of massive buckets of a broad range of stocks. Buying a small slice of the market is the idea for many passive investors. However, that’s not how many funds are created or weighted, and there are wide variations on this front worth considering.
That said, the Schwab U.S. Broad Market ETF (SCHB) is about as close of an approximation to what I just described above as they come. This fund tracks the total return of the entire Dow Jones U.S. Broad Stock Market Index, which essentially includes more than 2,400 stocks across virtually all sectors. In other words, investors in SCHB gain exposure to the entire universe of investable equities in the U.S. market. Talk about diversification, folks.
At an ultra-low expense ratio of 0.03% (and I have yet to find an ETF with a lower expense ratio), this ETF essentially provides the broadest diversification possible at the lowest possible price. That’s maximizing the goals of many investors who are looking at ETFs to begin with.
Perhaps my favorite element of this ETF though is the fact that turnover remains low, and the company’s portfolio holdings deliver a payout ratio of around 30% (providing a dividend yield of 1.1%, higher than most index funds tracking major indices right now). Those thinking long-term have a no-brainer decision as to whether or not this ETF makes sense. Indeed, for a broad swath of investors, I’d argue it does.
For investors looking at putting their capital to work in a market cap-weighted fashion may want to consider the Schwab U.S. Large-Cap ETF (SCHX). Now, most ETFs are market cap-weighted, though some have other profiles (such as equal weight) which can perform better in some markets.
That said, long-term investors who have overweighted large-cap companies, particularly in the U.S. market) over the course of the past decade have outperformed those who have stuck with small and mid-cap equities.
That’s largely because U.S. mega-cap tech companies are currently dominating the AI infrastructure buildout, from a global perspective. And while there are plenty of other companies in emerging markets and developed markets looking to catch up, this is a dynamic that could be in play for quite some time.
Tracking the 750 largest companies in the U.S. by market capitalization, investors gain exposure to some of the best-quality names in the market with a modestly higher concentration of such names than investing in other index funds. And with a similarly rock-bottom expense ratio of just 0.03%, this is a fund I think most with a long-term investing horizon can get behind.
Those who think the big will continue getting bigger have a great option to choose from in SCHX.
Last on this list is my personal favorite pick, in part because I’ve owned this particular ETF for quite some time. The Schwab U.S. Dividend Equity ETF (SCHD) is a way for investors to benefit from interest rates potentially coming down in 2026 and beyond, with this ETF focused on providing investors with exposure to the absolute best dividend stocks in the market.
With a current dividend yield of around 3.7%, I’d argue this ETF’s expense ratio of 0.06% is worth it. What I like most about SCHD relative to the aforementioned two picks is this ETF’s focus not only on up-front yield, but filtering its holdings by length of dividend growth. Only companies that have shown a decade of dividend growth or longer can make it into this ETF, with many of the top blue-chip names in this fund trading at reasonable multiples.
With an overall portfolio multiple of just 17-times earnings (far lower than the 25-times earnings multiple of the market approximately), that’s a big win for value-focused investors who want more in the way of passive income over time. I think retirees and those who are looking to set up their portfolios with a more defensive tilt can’t go wrong owning this ETF here.
You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. Even great investments can be a liability in retirement. It’s a simple difference between accumulating vs distributing, and it makes all the difference.
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