The popular dividend fund is more expensive than its own recent past, but the earnings inside haven't kept pace.
After a +30% run over the past twelve months, the Schwab US Dividend Equity ETF (SCHD) asks a sharp question of new money. With a 10-year US Treasury yielding a safe 4.8%, is what you get inside this fund worth the price you now have to pay? The answer lies in comparing the cost of the fund to what its collection of companies actually earns.
Paying a Premium to Your Past Self
First, let's look at the price tag versus the fund's own history. SCHD currently trades at a trailing price-to-earnings (P/E) ratio of 20.1. For context, over the last five years, that same ratio has averaged 18.4. Today's price is about 9% above that recent average. You are, quite simply, paying more for the same basket of stocks than investors have on average over the past five years. The question is whether you are getting more for your money.
When the Engine Sputters But the Price Stays High
#price #earnings
After a +30% run over the past twelve months, the Schwab US Dividend Equity ETF (SCHD) asks a sharp question of new money. With a 10-year US Treasury yielding a safe 4.8%, is what you get inside this fund worth the price you now have to pay? The answer lies in comparing the cost of the fund to what its collection of companies actually earns.
Paying a Premium to Your Past Self
First, let's look at the price tag versus the fund's own history. SCHD currently trades at a trailing price-to-earnings (P/E) ratio of 20.1. For context, over the last five years, that same ratio has averaged 18.4. Today's price is about 9% above that recent average. You are, quite simply, paying more for the same basket of stocks than investors have on average over the past five years. The question is whether you are getting more for your money.
When the Engine Sputters But the Price Stays High
#price #earnings
8 days ago
