SCHD ETF Slips Ahead of Portfolio Reshuffle — UNH, QCOM In; HAL, VLO Out

The Schwab U.S. Dividend Equity ETF SCHD -0.65% ▼ has been one of the strongest performers of 2026, outgaining the S&P 500 (SPX) by over 12% so far this year. However, the fund has faced a steady pullback over the past few weeks, closing lower by 0.65% on Friday at $30.39.

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While the price was down on Friday, the bigger change was that SCHD completed its annual rebalancing after the close. When markets open on Monday, the fund will trade with a different mix of stocks.

Why SCHD Is Changing Its Holdings

The reason for this big change is that SCHD follows a strict process to pick dividend-paying companies. Each March, it reviews its holdings and removes stocks that no longer meet its rules. It then adds new companies with stronger earnings and better dividend growth.

This time, the fund is reducing exposure to energy stocks and adding more names from healthcare and technology. Energy companies had grown too large after recent gains driven by higher oil prices and Middle East tensions, so the fund is trimming those positions and shifting into stocks like UnitedHealth UNH -1.73% ▼ and Qualcomm QCOM -1.05% ▼ .

SCHD’s Big Portfolio Shift

The biggest move is in energy. After strong gains in 2025 and early 2026, energy stocks had grown too large in the portfolio. SCHD is now slashing its energy exposure by about 8%, bringing it down from roughly 20% to around 12%. This is not due to weakness in those companies, but a shift to keep the portfolio balanced.

**Who’s Out: **Several big names did not meet the fund’s quality or yield rules this year. Notable removals include:

• Cisco CSCO -1.10% ▼

• Valero VLO -0.91% ▼

• Halliburton HAL -1.08% ▼

• AbbVie ABBV -0.56% ▼

**Who’s In: **To replace them, the fund is adding companies with strong earnings and dividend growth:

• UnitedHealth UNH -1.73% ▼

• Abbott Laboratories ABT -1.61% ▼

• Qualcomm QCOM -1.05% ▼

• Procter & Gamble PG -0.39% ▼

Does SCHD Pay Dividends?

Yes, SCHD pays dividends. In fact, the ETF is a dividend specialist, meaning it only owns companies with at least 10 years of consistent payments. The fund currently offers a yield of about 3.45%, compared with roughly 1.18% for the Vanguard S&P 500 ETF VOO -1.45% ▼ , which tracks the S&P 500 (SPX).

For income-focused investors, timing also matters. SCHD’s ex-dividend date is March 26, meaning you need to own the ETF before that date to receive the next quarterly payment.

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