The Schwab U.S. Dividend Equity ETF closed Thursday at $35.40, its highest finish on record, leaving the fund up roughly 29 percent since the end of 2025. The milestone arrived while the Invesco QQQ Trust was sliding, down about 3 percent that session and roughly 7 percent since early October, while the dividend fund climbed about 8 percent over the same stretch. The divergence is structural: as of mid-October, none of the ETF’s 102 holdings belonged to the Magnificent Seven group that has driven the broader market for years.
The index rules that keep big tech out
The fund follows the Dow Jones U.S. Dividend 100 Index, which imposes a ten-year dividend-payment requirement before a stock can enter the universe. That screen alone eliminates four of the seven mega-caps: Amazon and Tesla pay no dividend, while Meta Platforms and Alphabet only initiated payouts in 2024. Apple, Microsoft and Nvidia have longer histories, but each yields under 1 percent, which likely causes them to fall below the index’s yield cutoff that removes the lower-yielding half of eligible names. The result is a portfolio weighted toward consumer staples and healthcare, about 39 percent combined as of September 30, with energy at roughly 15 percent and technology at just 12 percent.
A core that barely moved
The index rebalances annually in March, yet a cluster of heavyweight positions survived the turnover. Texas Instruments, ConocoPhillips, Chevron, Merck, Amgen and Coca-Cola accounted for roughly 24 percent of the fund in early January and all six remained among the top ten holdings in mid-October. Texas Instruments, the largest position, has risen about 61 percent this year. The two oil producers gained roughly 56 percent and 49 percent, the drugmakers about 40 percent and 37 percent, and Coca-Cola 36 percent. Texas Instruments also underscores that the fund is not devoid of semiconductors, it simply owns a mature, dividend-paying slice of the sector rather than the high-growth names.
The rebalance shifted weight toward healthcare
March’s reconstitution trimmed the energy allocation by about seven percentage points and added healthcare names such as UnitedHealth Group and Abbott Laboratories. Procter and Gamble, now one of the three largest holdings, was not in the portfolio in January. Meanwhile, the absent mega-caps delivered an uneven 2026: with dividends included, the Schwab fund has returned around 32 percent, while Apple managed about 28 percent, Microsoft, Nvidia, Alphabet and Amazon ranged between 4 percent and 14 percent, Meta slipped roughly 1 percent and Tesla fell about 17 percent.
The trade-off is the point
The record close does not signal a strategy shift. In the three prior years combined, the dividend fund returned about 22 percent with dividends versus roughly 135 percent for QQQ. That gap is the baked-in cost of excluding the market’s growth leaders. The fund holds up when those names retreat, as recent weeks demonstrate, but it lags sharply when they lead. This year’s gains also lean on sectors that can reverse quickly, oil profits track commodity prices, and a 61 percent surge in a mature chipmaker is atypical. The ETF is doing exactly what its rules dictate: owning steady dividend payers instead of the largest growth stories. For an owner, that makes it a diversifier, not a replacement.