SCHD 2035 Forecast: The Numbers Will Stun You
Where Could the Schwab U.S. Dividend Equity ETF (SCHD) Be in 2035? A Beginner’s Guide
What Is SCHD, Anyway?
Imagine a basket that holds 100 different companies—all of them known for paying reliable, growing dividends (cash payments to shareholders). That basket is the Schwab U.S. Dividend Equity ETF, which trades under the ticker SCHD.
- ETF = Exchange-Traded Fund (a basket of stocks you can buy and sell like a single stock)
- Dividend = A slice of a company’s profits paid out to you, just for owning the stock
- Yield = The annual dividend divided by the share price (like an interest rate on your investment)
Think of SCHD as a "dividend all-star team" managed by professionals who swap players once a year to keep the lineup strong.
The Big Numbers: Why Investors Are Excited
Since its launch in 2011, SCHD has been a compounding machine. Here’s the scorecard:
| Metric | Number | What It Means (ELI5) |
|---|---|---|
| Annualized Total Return | 13.4% | Your money grew ~13.4% per year on average (price + dividends) |
| Share Price Growth | ~10% per year | The price of one share has risen steadily |
| Current Dividend Yield | 3.1% | For every $100 invested, you get $3.10/year in cash |
| Dividend Growth Rate (since 2017) | 11.2% CAGR | The cash payout has doubled roughly every 6.5 years |
Compounding = Earning returns on your returns. It’s like a snowball rolling downhill—gets bigger and faster over time.
The 2035 Projection: What Could Happen
If SCHD keeps doing what it’s been doing, here’s the math-class projection for the end of 2035:
1. Share Price: From $35 → ~$90
- Assumption: Price keeps growing ~10% per year
- Result: ~150% increase over ~10 years
2. Annual Dividend Per Share: From $1.05 → Over $2.90
- Assumption: Dividend keeps growing ~11% per year
- Result: Nearly 3x the cash payout
3. Yield on Cost: From 3.1% → Over 8%
- Yield on Cost = (Future Annual Dividend) ÷ (Your Original Purchase Price)
- Translation: If you buy today at $35, by 2035 you’d collect >8% of your original money every year—just in dividends.
Important Callout: These Are Projections, Not Promises
- Past performance ≠ future results
- The fund’s holdings change every year
- Dividend growth could slow down (more on this below)
What Drives SCHD’s Returns? (The "Secret Sauce")
1. High Quality, High Yield
SCHD tracks an index that picks companies with:
- Strong dividend histories
- Healthy financials (low debt, steady profits)
- Above-average dividend yields
2. Annual "Refresh"
Once a year, the index rebalances—kicking out companies that no longer meet the criteria and adding new ones. This keeps the portfolio fresh.
3. Dividend Growth > High Yield Alone
The current holdings have grown dividends at 9.4% annually over the last 5 years. The previous lineup did 8.6%. That’s faster than inflation and faster than many "high yield" funds.
ELI5 Analogy: Imagine a farm that not only gives you apples every year (dividends), but plants more trees so next year’s harvest is bigger. SCHD tries to own farms that keep planting trees.
The Caveats: Why It Might Not Hit $90 / 8% Yield
| Risk | What Could Happen |
|---|---|
| Dividend growth slows | If companies cut or slow hikes, the 11% CAGR drops → lower future income & price |
| Market crashes | Share price could fall sharply (even if dividends keep coming) |
| Interest rates rise | High-yield stocks can look less attractive vs. bonds |
| Sector concentration | SCHD leans toward certain sectors (e.g., industrials, healthcare, financials) |
Bottom Line: Even if growth slows, SCHD has a strong long-term track record of picking companies that grow dividends and share prices. That makes it a solid core holding for a diversified portfolio.
Should You Buy SCHD Right Now?
The Motley Fool’s Take
Their Stock Advisor team recently released their "10 Best Stocks to Buy Now" list—and SCHD wasn’t on it.
- Their top picks are aimed at maximum long-term growth (think: the next Netflix or Nvidia)
- SCHD is more of a steady wealth-builder than a "home run" swing
How to Decide
Ask yourself:
- Do I want steady, growing income + moderate growth? → SCHD fits
- Am I hunting for the next 100-bagger? → Look at individual growth stocks
- Do I want a "set it and forget it" dividend core? → SCHD is a top contender
Author Disclosure: Matt DiLallo (the article’s author) owns SCHD. The Motley Fool has no position in it.
Summary: Key Takeaways
- SCHD has delivered 13.4% annualized total returns since 2011
- Dividends have grown ~11%/year since 2017
- If trends continue: $35 → ~$90 share price, 3.1% → 8%+ yield on cost by 2035
- Projections assume past trends continue—no guarantees
- Great "core" holding for dividend growth + lower risk
- Not a "top 10 growth stock" pick—but serves a different purpose
FAQ: Your Questions Answered
1. What does "yield on cost" mean?
It’s your annual dividend income divided by what you originally paid. If you buy at $35 and the dividend grows to $2.90, your yield on cost is $2.90 ÷ $35 = 8.3%—even if the current yield is only 3.1%.
2. Is SCHD safe during a recession?
Relatively. It owns profitable, established companies with strong dividend track records. But the share price can still drop. The dividends are more resilient than most.
3. How often does SCHD pay dividends?
Quarterly (every 3 months). You get cash in your brokerage account four times a year.
4. What’s the expense ratio?
0.06% ($6 per $10,000 invested per year). Very low—one of the cheapest dividend ETFs.
5. Can I reinvest dividends automatically?
Yes! Most brokers offer DRIP (Dividend Reinvestment Program)—it buys more SCHD shares automatically with your dividends, supercharging compounding.
Final Thought: SCHD isn’t a lottery ticket. It’s a well-built engine for compounding wealth through rising dividends and steady price appreciation. If that matches your goals, it deserves a serious look for the core of your portfolio.