- NVDA
- SCHD
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:
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Healthy and growing dividend payers tend to increase their payouts over time, often helping shareholders keep up with inflation.
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Such companies also tend to keep paying no matter whether the economy is booming or in a slump.
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Dividend payers are simply great investments, in general. Check it out:
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
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:
You can see that while the S&P 500 (SNPINDEX: ^GSPC) index fund performed better, it didn’t perform thatmuch 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.
