A $1,000 Monthly Investment in the Schwab U.S. Dividend Equity ETF (SCHD) Could Build Serious Passive Income Over 20 Years

Key Points The Schwab U.S. Dividend Equity ETF offers a great mix of growth and dividend income. Its dividend recently yielded 3%. It's invested in a range of mostly blue chip companies. 10 stocks we like better than Schwab U.S. Dividend Equity ETF › Looking for passive income and a lot of it? Who wouldn't like that? Passive income can come from multiple sources, such as certificates of deposit (CDs), pensions, annuities, royalty checks, rental properties, and dividends, to name a few. I think dividend income is particularly compelling because: Healthy and growing dividend payers tend to increase their payouts over time, often helping shareholders keep up with inflation. Such companies also tend to keep paying no matter whether the economy is booming or in a slump. Dividend payers are simply great investments, in general. Check it out: Dividend-Paying Status Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue » Average Annual Total Return, 1973-2025 Dividend growers and initiators 10.22% Dividend payers 9.20% No change in dividend policy 6.87% Dividend non-payers 4.21% Dividend shrinkers and eliminators (0.96%) Equal-weighted S&P 500 index 7.74% Data source: Ned Davis Research and Hartford Funds. Image source: Getty Images. One of my favorite dividend-focused investments is the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) . If you invest, say, $1,000 per month, you could build a meaningful passive income stream . I'll get into how much soon. Meet the Schwab U.S. Dividend Equity ETF The Schwab U.S. Dividend Equity ETF is an exchange-traded fund (ETF) -- a fund that trades like a stock. So you can easily invest in it via most brokerage accounts at any time during trading hours. It tracks the Dow Jones U.S. Dividend 100 Index , which holds about 100 carefully selected stocks from high-quality companies with at least 10 years of dividend payments. Here's how the Schwab ETF has performed in recent years -- compared to a good low-fee S&P 500 index fund: ETF Recent Yield 5-Year Avg. Annual Return 10-Year Avg. Annual Return 15-Year Avg. Annual Return Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) 3% 9.98% 13.12% 13.47%* Vanguard S&P 500 ETF (NYSEMKT: VOO) 1% 12.65% 15.31% 15.06% Data source: Morningstar.com, as of Sept. 15, 2026. *as of inception date, Oct. 20, 2011 You can see that while the S&P 500 (SNPINDEX: ^GSPC) index fund performed better, it didn't perform that much better. And its recent dividend yield is triple that of the S&P 500. In other words, it tends to deliver solid growth -- plus solid dividend income. That's not the norm. Many good dividend-focused ETFs tend to offer either brisk growth or a meaningful dividend yield, but not both. Here are the Schwab ETF's recent top holdings, which recently made up about 42% of the fund's value: Stock Weight in ETF Merck 4.73% Abbott Labs 4.41% Chevron 4.33% ConocoPhillips 4.27% Coca-Cola 4.25% Amgen 4.19% Verizon Communications 4.16% Procter & Gamble 3.94% UnitedHealth Group 3.76% The Home Depot 3.68% Data source: Morningstar.com, as of Sept. 16, 2026. These are a very different set of top holdings from those of the S&P 500 index, which includes stocks such as Nvidia and Apple, each weighted at 8.1% and 7%, respectively. Such dynamic growth stocks explain the S&P 500's terrific performance in recent years, but whenever the stock market corrects or crashes, such stocks often fall harder. The Schwab U.S. Dividend Equity ETF, on the other hand, is more focused on somewhat slower-but-steady growers. How much can you amass investing $1,000 per month? So if you invest, say, $1,000 per month, which is $12,000 per year, in the Schwab ETF, how well might you do? Well, here are several credible scenarios: Investing $1,000 per month ($12,000 annually) for Growing at 8% annually Growing at 10% annually Growing at 12% annually Five years $70,399 $73,261 $76,234 10 years $173,839 $191,249 $210,585 15 years $325,825 $381,270 $447,357 20 years $549,144 $687,300 $864,629 25 years $877,271 $1,180,165 $1,600,006 30 years $1,359,399 $1,973,928 $2,895,992 35 years $2,067,802 $3,252,292 $5,179,962 40 years $3,108,678 $5,311,111 $9,205,097 Data source: Calculations via Investor.gov's calculator. Those results include the reinvestment of dividends. If you want to separate the dividend income, you could do it this way: Take year 20. Let's say the fund averaged 10% annual growth, and your stake is worth around $687,000. If the ETF's dividend yield remains 3%, you'd collect about $20,600 in dividend income. Passive income seekers should definitely consider investing in one or more solid dividend-focused ETFs -- such as this one. Should you buy stock in Schwab U.S. Dividend Equity ETF right now? Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $406,141 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,347,745 !* Now, it’s worth noting Stock Advisor’s total average return is 940 % — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of September 19, 2026. Selena Maranjian has positions in Amgen, Apple, Nvidia, Procter & Gamble, Schwab U.S. Dividend Equity ETF, and Verizon Communications. The Motley Fool has positions in and recommends Abbott Laboratories, Amgen, Apple, Chevron, Home Depot, Merck, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends ConocoPhillips, UnitedHealth Group, and Verizon Communications. The Motley Fool has a disclosure policy .

The Schwab U.S. Dividend Equity ETF offers a great mix of growth and dividend income.

Looking for passive income and a lot of it? Who wouldn't like that? Passive income can come from multiple sources, such as certificates of deposit (CDs), pensions, annuities, royalty checks, rental properties, and dividends, to name a few. I think dividend income is particularly compelling because:

Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

One of my favorite dividend-focused investments is the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) . If you invest, say, $1,000 per month, you could build a meaningful passive income stream . I'll get into how much soon.

The Schwab U.S. Dividend Equity ETF is an exchange-traded fund (ETF) -- a fund that trades like a stock. So you can easily invest in it via most brokerage accounts at any time during trading hours.

It tracks the Dow Jones U.S. Dividend 100 Index , which holds about 100 carefully selected stocks from high-quality companies with at least 10 years of dividend payments. Here's how the Schwab ETF has performed in recent years -- compared to a good low-fee S&P 500 index fund:

Data source: Morningstar.com, as of Sept. 15, 2026. *as of inception date, Oct. 20, 2011