Invest in a chosen index fund for long-term passive income. Keep hold of the investment indefinitely.

Purchasing a Specific Index Fund to Secure Lifelong Passive Income

The Schwab U.S. Dividend Equity ETF (SCHD), launched by Charles Schwab in 2011, offers a passive income opportunity for investors. This ETF focuses on U.S. stocks with high dividend yields, solid dividend payment records, and strong financial strength, attempting to track the performance of the Dow Jones U.S. Dividend 100 Index.

With an average annual return of 12.25% since inception, the ETF has demonstrated long-term success. However, it experienced volatility during the early part of the COVID-19 pandemic, with its price plunging more than 30%. Despite this dip, the ETF has bounced back, and its positives outweigh its negatives for investors seeking passive income.

The Schwab U.S. Dividend Equity ETF currently owns 103 stocks, with top holdings including Pepsico, Altria, Chevron, AbbVie, and Home Depot. Many of these stocks have attractive valuations, with an average price-to-earnings ratio of 17, and tend to efficiently generate profits, with an average return on equity of 28.2%.

Three of the ETF's top holdings are Dividend Kings, having at least 50 consecutive years of dividend increases. This consistency in dividend payments is a testament to the ETF's focus on high-quality, sustainable dividends.

The Schwab U.S. Dividend Equity ETF's annual expense ratio is only 0.06%, making it a cost-effective choice for investors. The distribution yield over the last 12 months for the ETF is 3.87%, and approximately $3,800 in passive income can be expected annually for every $100,000 invested.

The ETF's 30-day SEC yield is 3.81%, and the distribution per share has been affected by a 3-for-1 stock split on Oct. 10, 2024. The Schwab U.S. Dividend Equity ETF paid a distribution of $0.7545 per share on Sept. 25, 2024, which fell to $0.2645 on Dec. 16, 2024, due to the stock split.

The Schwab U.S. Dividend Equity ETF is managed by Charles Schwab Asset Management, and it does not have any advertisements mentioned in the text. While the ETF does not have a lengthy track record, its focus on high-quality, sustainable dividends and its cost-effectiveness make it an appealing choice for investors seeking passive income.