Love the SCHD ETF? SCHK, SCHB, SCHX, and HYT are good too

The Schwab US Dividend Equity (SCHD) ETF has had robust inflows this year as it moved to its all-time high. Its total returns this year stood at almost 10%, meaning that it has lagged the performance of the mainstream funds that track the S&P 500 and Nasdaq 100 indices. 

In two previous articles, I highlighted some of the top ETFs that I believe are better alternatives to the SCHD, which has grown its assets to over $58 billion in assets. 

The VanEck Morningstar Wide Moat ETF (MOAT) has done well, rising by over 10% this year. Similarly, the Schwab US Large-Cap Growth ETF (SCHG) has risen by 21%, helped by its investments in technology companies.

The other funds that I have highlighted before like the Vanguard Dividend Appreciation Index Fund (VIG), iShares Core Dividend Growth (DGRO), and the Vanguard High Dividend Fund (VYM) have done better. Only the Pacer US Cash Cows (COWZ) fund has lagged behind the SCHD fund. 

This article looks at some more funds to complement the SCHD ETF, including SCHX, SCHK, SCHB, and HYT. 

Schwab US Large-Cap ETF | SCHX

The SCHX is one of the top ETFs to complement your SCHD investments with. It tracks the Dow Jones US Large-Cap Total Stock Market Index and has accumulated over $44 billion in assets. 

It is a very cheap fund with an expense ratio of just 0.03% and over 753 companies in its portfolio. 

Technology is the biggest part of the fund, with companies in the industry accounting for about 31% of the fund. It is then followed by financials, health care, and consumer discretionary. 

Some of the most notable companies in the fund are Microsoft, Amazon, Meta Platforms, Alphabet, and Berkshire Hathaway. The others are popular names like Eli Lilly and Broadcom. 

This fund is complementary to the SCHD ETF because of its exposure to technology companies, which SCHD lacks. SCHD is mostly made up of companies in industries like financials, health care, consumer staples, and industrials. As shown below, the SCHX’s total returns in the past five years stood at 104% vs SCHD’s 84%.

Schwab 1000 Index ETF | SCHK

The Schwab 1000 Index ETF (SCHK) ETF is another fund to complement the SCHD ETF. It tracks the Schwab 1000 index that gives users access to 1000 biggest companies in the United States. It covers about 90% of the total US market cap, making it an ideal bet on the US.

The fund charges 0.05% and has a price-to-earnings ratio of 26.  Established in 2007, the fund has accumulated over $3.6 billion in assets.

By tracking most companies in the US, it means that technology is a major part of the fund. Tech firms account for about 31% of the fund, which explains why its PE ratio is substantial. 

The other group is financials, which account for 12.76% of the fund and healthcare (11.5%) and consumer discretionary (10%.

By having a large presence in tech, the SCHK ETF has historically done better than the SCHD fund. In the last five years, its total returns were 101% vs SCHD’s 84%.

Schwab US Broad Market ETF | SCHB

The Schwab US Broad Market ETF is another quality ETF to invest in to complement the SCHD fund. It is a low-cost fund that gives you access to 2,500 of the biggest companies in the United States. It has an expense ratio of 0.03%, making it highly affordable.

The SCHB ETF has accumulated over $30 billion in assets and a price-to-equity ratio of 25.7, making it a bit cheaper than the SCHK. 

Like the other two funds in this list, SCHD is made up of companies in all industries, with the technology ones being the most prominent. Tech firms account for about 30.67% of the fund and are followed by financials, healthcare, and consumer discretionary. This fund has returned 99% in the last five years.

Blackrock Corporate High Yield Fund | HYT

Unlike the other three funds in this list, the Blackrock Corporate High Yield Fund (HYT) is not an ETF. It is a closed-end fund that invests in junk bonds, corporate loans, and preferred securities that lie below investment grade.

The fund has over $1.4 billion in assets and invests in 1,109 assets. Its top holdings are companies like Cloud Software Group, Hub International, Transdigm, and Venture Global. 85% of all its holdings are from the United States while the rest are from Canada, UK, and Luxemburg. 

This fund complements the SCHD because of its dividends since, junk companies typically pay a higher dividend. It has a dividend yield of 9.45%, meaning that a $10,000 investment will bring in $945 in annual returns. 

However, like other CEFs, it has substantial costs with its expense ratio being at 1.51%. Net of fees, the fund’s dividend payout of $794 is also good. The HYT fund has had total returns of 51.14%, lower than the SCHD’s 84%.