Earn $10K Passive Income with Schwab ETFs Strategy

The mathematical foundation of this passive income strategy rests on achieving an average dividend yield of 3.46% across three carefully selected Schwab ETFs. When applied to a $300,000 portfolio equally divided among the Schwab U.S. Dividend Equity ETF (SCHD), Schwab International Dividend Equity ETF (SCHY), and Schwab U.S. REIT ETF (SCHH), this yield translates to approximately $10,380 in annual dividend income. The strategy eliminates the complexity of individual stock selection while providing exposure to hundreds of carefully vetted companies across multiple economic sectors.

Each $100,000 allocation serves a distinct purpose in the overall portfolio construction. SCHD focuses on established U.S. dividend payers, SCHY provides international diversification with high-yielding global companies, and SCHH offers exposure to the real estate sector through carefully selected REITs. The combined approach creates a balanced income stream that isn’t overly dependent on any single market or economic sector, reducing concentration risk while maximizing yield potential.

The Schwab U.S. Dividend Equity ETF (SCHD) forms the core domestic component of this income strategy, currently offering a trailing 12-month distribution yield of 3.67%. This fund holds 103 U.S. stocks across multiple economic sectors, including established dividend payers like Chevron (CVX), Coca-Cola (KO), Lockheed Martin (LMT), and Altria Group (MO). The diversification across these blue-chip companies provides stability while maintaining attractive income generation.

SCHD’s ultra-low expense ratio of 0.06% represents just $60 annually on a $100,000 investment, ensuring that the majority of dividend income flows directly to investors rather than being consumed by management fees. The fund’s focus on quality U.S. companies with strong dividend histories makes it an ideal foundation for investors seeking reliable domestic income without the research burden of individual stock selection.

The Schwab International Dividend Equity ETF (SCHY) expands the income strategy beyond U.S. borders, currently delivering an impressive 3.76% trailing 12-month distribution yield. This fund concentrates on 142 non-U.S. businesses that offer high dividend yields, including global leaders like Roche Holding (RHHBY), Vinci (VCISY), Wesfarmers Limited (WFAFY), and TotalEnergies (TTE). The international exposure provides valuable geographic diversification that can enhance portfolio resilience.

With an expense ratio of just 0.08%, SCHY offers investors access to carefully researched international dividend stocks without the complexity of navigating foreign markets independently. The fund’s management team conducts thorough due diligence on each holding, allowing investors to benefit from global income opportunities while minimizing research overhead. This international component helps protect against domestic market underperformance while capturing dividend opportunities from established global corporations.

Completing the trifecta, the Schwab U.S. REIT ETF (SCHH) provides targeted exposure to the real estate sector with a current trailing 12-month distribution yield of 2.96%. The fund holds 124 carefully selected real estate investment trusts, specifically excluding mortgage REITs and hybrid REITs to focus on pure property ownership companies. This approach provides direct exposure to the income-generating potential of commercial and residential real estate.

SCHH includes well-established real estate names like Realty Income Corp. (O), Simon Property Group (SPG), Crown Castle (CCI), and Welltower (WELL), offering investors instant diversification across different property types and geographic markets. With an expense ratio of 0.07%, the fund makes real estate investing accessible without the capital requirements and management challenges of direct property ownership. The REIT component adds another layer of diversification while capturing income from a sector known for its dividend-paying characteristics.

The combined expense ratios across all three ETFs remain exceptionally low, ranging from 0.06% to 0.08%, ensuring that management fees don’t significantly erode the targeted $10,000 annual income. On a $300,000 portfolio, the total annual management costs would amount to approximately $210, leaving the vast majority of dividend income available for reinvestment or consumption. This cost efficiency is particularly important for income-focused investors seeking to maximize their returns.

Beyond the attractive yields and low costs, this strategy provides instant diversification across 369 individual holdings spanning U.S. dividend stocks, international corporations, and real estate investment trusts. The approach eliminates single-stock risk while maintaining exposure to multiple income-generating asset classes. For investors with the required capital, this three-ETF framework offers a streamlined path to substantial passive income without the complexity of managing numerous individual positions or conducting extensive security analysis.