A focused approach to dividend investing with a single ETF portfolio
Report created on Aug 20, 2025Risk profile
4/7
Diversification profile
2/5
Positions
-
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 100.00%
This portfolio is entirely invested in the Schwab U.S. Dividend Equity ETF, making it a highly focused strategy with a clear emphasis on dividend-paying stocks within the U.S. market. The concentration in one ETF simplifies management but limits diversification across asset classes, sectors, and geographies. While this approach aligns with a strategy targeting income through dividends, it exposes the portfolio to sector-specific and market-wide risks without the buffer diversified investments can provide.
Growth
Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 13.27%, with a maximum drawdown of -33.40%. These figures highlight a strong performance trend, albeit with significant volatility, as indicated by the drawdown. The days contributing to 90% of returns being concentrated in just 29 days underscores the potential for high variability in returns, emphasizing the importance of a long-term perspective when investing in such a portfolio.
Projection
The Monte Carlo simulation, with 1,000 runs, suggests a wide range of outcomes for this portfolio, from a low 5th percentile increase of 101% to a high 67th percentile increase of 652.2%. This projection underscores the inherent uncertainty in investing, particularly with a portfolio so concentrated. While the majority of simulations result in positive returns, the broad spread between potential outcomes highlights the risk involved.
Asset classes
- Stocks 100%
With 100% of the portfolio allocated to stocks, there is a clear growth orientation, albeit with a focus on income through dividends. This singular asset class approach lacks the risk mitigation benefits that come from diversifying across different types of assets, such as bonds or real estate. While stocks have historically offered higher returns, they also come with higher volatility, which this portfolio fully embraces.
Sectors
- Energy 20%
- Consumer Staples 19%
- Health Care 16%
- Technology 11%
- Industrials 11%
- Consumer Discretionary 10%
- Financials 9%
- Telecommunications 4%
- Basic Materials 2%
The sector allocation shows a heavy tilt towards Energy, Consumer Defensive, and Healthcare, with lesser exposure to Technology and other sectors. This distribution suggests a conservative tilt, favoring sectors often considered more resilient during economic downturns. However, the underrepresentation in sectors like Utilities and the minimal exposure to Basic Materials and Communication Services could mean missed opportunities in other areas of the market.
Regions
- North America 99%
- Europe Developed 1%
With 99% of assets allocated to North America and a negligible 1% to developed Europe, the portfolio's geographic exposure is highly concentrated. This focus on the U.S. market maximizes exposure to the world's largest economy but does little to hedge against region-specific risks or to capture growth in other global markets.
Market capitalization
- Large-cap 59%
- Mid-cap 33%
- Small-cap 6%
- Micro-cap 1%
The portfolio's market capitalization breakdown, with a bias towards Big (59%) and Medium (33%) cap stocks, aligns with its dividend-focused strategy, as larger companies are often more likely to pay and sustain dividends. However, the small exposure to Small (6%) and Micro (1%) cap stocks limits potential for high growth from smaller, more agile companies.
Dividends
- Schwab U.S. Dividend Equity ETF 3.70%
- Weighted yield (per year) 3.70%
The portfolio's dividend yield of 3.70% is attractive, particularly for income-focused investors. This yield contributes to the portfolio's total return, providing a steady income stream in addition to the potential for capital appreciation. However, investors should be mindful of the balance between seeking high dividends and ensuring the underlying investments remain fundamentally sound.
Ongoing product costs
- Schwab U.S. Dividend Equity ETF 0.06%
- Weighted costs total (per year) 0.06%
With a total expense ratio (TER) of just 0.06%, the portfolio benefits from extremely low costs, which supports better net returns over the long term. Low costs are particularly beneficial in a strategy focused on dividends, as they ensure a greater portion of the income generated is retained by the investor rather than being eroded by fees.
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