Connect with us

Hi, what are you looking for?


SCHD ETF stock nears its death cross amid rotation to Treasuries

The Schwab US Dividend ETF (SCHD) stock price has dived in the past few weeks as investors rotate from stocks to cash and Treasuries. The fund was trading at $70.88, which was the lowest point since October last year. It has dropped by about 10% below its highest point this year.

Dividend stocks competing with cash

The SCHD ETF is one of the biggest funds focused on dividend companies in the US. It competes with the likes of the iShares Select Dividend ETF (DVY) and Vanguard High Dividend Yield ETF (VYM). It has over $44 billion in assets with its top constituent companies being Broadcom, Cisco, Texas Instruments, and Verizon.

The Schwab US Dividend has a dividend yield of 3.56%, which is higher than the peers mentioned above. This yield is still substantially lower than the headline American inflation, which stands at above 6%. It is also lower than what government bonds are yielding.

Treasury yields dropped sharply on Monday as investors predicted that the Federal Reserve will slow its rate hikes this month. As I wrote in this article, analysts at Goldman Sachs believe that the Fed will hike by just 0.25% this month or avoid hiking after all.

Still, Treasury bonds have a higher yield than the SCHD ETF. Data compiled by Investing shows that the 1-month note has a yield of 4.6% while the 6-month is yielding at 4.7%. The 2-year and 10-year bond yields stand at 4.13% and 3.57%, respectively. These yields have dropped sharply this week considering that the 2-year was yielding at 5% on Friday last week.

US Treasury yields

Therefore, some income investors are clearly rotating from dividend stocks to bonds and cash. In a note to WSJ, an analyst said:

“There is no need whatsoever to buy a risky company just because it’s in the same ZIP Code as cash.”

However, there is a point where investing in the SCHD ETF makes more sense than holding cash. For one, it is unclear how long the short-term Treasuries will continue doing better than the fund. With the financial sector imploding, it means that the Fed could start changing its tune and even slash rates later this year.

Further, the SCHD ETF offers a higher dividend growth than its peers. Its 3-year CAGR was 14.10% compared to DVY and VYM’s 4.77% and 4.59%. As shown below, its dividend ratings are relatively solid as well.

SCHD dividend safety
SCHD dividend safety

SCHD ETF technical analysis

SCHD ETF stock

SCHD chart by TradingView

In my last article on the Schwab US Dividend Equity ETF, I argued that while it was a good fund to invest in, its technicals were extremely worrying. This forecast was accurate as the fund has retreated by ~8% since then. It has also moved slightly below the key support level at $73.98, the neckline of the triple top pattern.

The SCHD ETF is also about to form a death cross, which forms when the 50-day and 200-day moving averages make a crossover. Therefore, there is a likelihood that the fund will continue falling as sellers target the next key support at $65.

The post SCHD ETF stock nears its death cross amid rotation to Treasuries appeared first on Invezz.

You May Also Like


Mimiq, Inc is announcing today the launch of their new product, Mimiq Track, at CES as part of their latest product line to operate...


Genesis Trading, the cryptocurrency brokerage and lender that halted customer withdrawals in the aftermath of FTX collapse, believes it can sort out its financial...

Editor's Pick

If you haven’t been following the “Twitter Files” saga, the gist of it is that the US federal government routinely pressured pre-Musk Twitter, and...

Editor's Pick

On April 23, 1985, the Coca-Cola Company made one of the biggest mistakes in American business history: it changed the formula for Coca-Cola. Outraged...

Disclaimer:, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2023