The Problem with SCHD's 3.2% Yield

Retire with SCHD. These videos appear in my feed constantly. It's the allure of compounding income. The income grows slowly at first and then it accelerates. It's pretty cool. [music] It's also simple. One fund provides a reliable source of income that outpaces inflation. All that is true, but I went a different way. For each million

dollars investing, [music] SCHD pays you about $32,000 and my portfolio pays $80,000. Today, we'll explore some of the pros and cons of SCHD and why I chose income investing instead. >> [music] >> Let's start with what I like about SCHD. The distribution history looks fantastic. The trend is up into the right. And if we hid the years along the

bottom of the chart, it would be difficult to guess where the market corrected during COVID 2020 and the bear market of 2022 because the income was unaffected. By the way, if you're new to the channel, I retired in 2017 and that's when I got serious about researching my investments in greater depth and this channel is where I share

what I learn. I mostly focus on stocks and funds paying consistent yields of 8 to 12% versus SCHD at 3.2% and if you'd like a copy of my portfolio, it's available via Armchair Insider, link in the description. It's free. An oversimplified version of the SCHD strategy is to pick large US companies with a long history of growing their

dividends. It's based on a formula that I examined in more detail in this episode from 3 years ago. There are no guarantees, but I think the formula is good at selecting quality stocks that are unlikely to cut their dividends. There's one other feature of SCHD that's less obvious, low volatility. At the end