SCHD ETF is overbought: is it a good dividend stock?

The Schwab US Dividend Equity (SCHD) continued its strong bull run and is sitting at its all-time high.

SCHD has jumped in the last eight consecutive weeks and is now hovering at its all-time high as investors continue rotation from growth companies to value. 

It has risen by 14% this year, beating the S&P 500 and Nasdaq 100 indices, which have dropped by 0.33% and 1.88%, respectively. 

Rotation from growth to value 

The SCHD stock price has been in strong growth this year and is beating the broader market as investors continue to rotate from growth companies to value.

This performance is different from what happened last year when the Schwab Dividend ETF underperformed the broader market.

The ongoing performance is happening as top technology companies continue falling.

For example, NVIDIA, which has benefited from the ongoing AI boom, has tumbled by 14% from its highest level this year.

Similarly, Palantir stock has dropped to $130, down sharply from the all-time high of $210.

Microsoft stock has dropped to $400 from the all-time high of $552.

Other top companies like Adobe, ServiceNow, Intuit, and Salesforce have all plunged in the past few months.

In contrast, investors have continued to move to traditional companies like defense contractors and energy giants, which don't have an AI component.

For example, Lockheed Martin, the biggest company in the SCHD ETF, soared to a record high of $652 and 62% from its lowest level in 2025.

This rally happened after Donald Trump announced a significant increase in defense spending from nearly $1 trillion to $1.5 trillion.

Texas Instrument stock price has soared to $225, in line with our previous forecast,in which we pointed to the formation of the inverted head-and-shoulders pattern on the daily chart.

The company’s business is doing well as demand rises from companies like Apple and Ford.

Verizon, the third-biggest company in the SCHD ETF, has soared to $49 from last year's low of $37.

Its rally accelerated after publishing strong financial results, which showed that its revenue rose by 2% to $36 billion, with its free cash flow rising to $20.1 billion.

ConocoPhillips and Chevron stocks have done well in the past few months, a trend that may continue as crude oil prices jump. Oil may continue rising in the coming months as Donald Trump plans to attack Iran.

Other top companies in the SCHD ETF that have done well in the past few months are Bristol Myers Squibb, Merck, Altria, and PepsiCo.

SCHD ETF stock price technical analysis 

The weekly timeframe chart shows that the SCHD stock price has done well this year as we predicted.

This rally accelerated after the stock crossed the important resistance level at $28.40, its highest level in November 2024. Moving above that level invalidated the double-top pattern.

The stock price has remained above all moving averages, while the Average Directional Index (ADX) moved to 27, its highest level in June last year. Soaring ADX is a sign that the uptrend is continuing.

The Relative Strength Index (RSI) has jumped to the overbought level of 82, its highest level since May 2021.

Therefore, the stock will likely retreat in the coming weeks as investors book profits.

If this happens, the next key target level to watch will be at $28, which is about 10% below the current level.