SCHD ETF Sentiment Turns Negative as Investors Sour

The Schwab US Dividend Equity ETF (SCHD) has long been considered a cornerstone for income-focused portfolios, boasting a 3.83% dividend yield and nearly $72 billion in assets under management. However, October 2025 has revealed a dramatic shift in investor perception. According to 24/7 Wall St.’s sentiment tracker, SCHD maintained an 8/10 bullish rating for most of the year but plummeted to a 3/10 bearish rating starting in October. This sentiment collapse stems directly from performance metrics: year-to-date, SCHD has returned essentially 0%, while over the last twelve months, shares have declined by 3%.

This underperformance becomes particularly stark when compared to broader market indices. While SCHD languished, the Nasdaq delivered a 19% year-to-date return and a 28% gain over the last twelve months. The growing realization among investors is that no amount of dividend income can offset such significant performance gaps. As one X user, @palmBTCx, bluntly stated, SCHD ‘will not outpace inflation’—a damning claim for an investment specifically designed to provide steady, reliable income to investors.

Across Reddit, X, and financial forums, the tone toward SCHD has turned decisively negative. While some investors previously championed accumulation strategies—with one Reddit user planning to reach ‘$700 – $800 in monthly dividends’ through SCHD, JEPI, and JEPQ—recent posts reflect growing disillusionment. A post titled ‘No more SCHD for me SOLD’ declared the poster had ‘had it with SCHD’ as their largest holding, redirecting investments toward individual stocks like O, MAIN, MO, BTI, XOM, RTX, TXN, and SBUX.

The frustration extends beyond simple performance comparisons. Commenters pointed to SCHD’s poor Sharpe ratio, noting it ‘historically substantially lags the general market while managing to capture most of the downside.’ This criticism highlights concerns about risk-adjusted returns, suggesting the ETF fails to deliver adequate compensation for the volatility investors endure. The collective sentiment across platforms indicates a fundamental reevaluation of SCHD’s role in portfolios, particularly among those seeking both income and growth.

SCHD’s structural characteristics contribute to its current challenges. The ETF’s top three holdings—AbbVie, Merck, and Amgen—are all healthcare-related, creating significant sector concentration that may limit diversification benefits. While these companies traditionally offer stable dividends, their collective performance has not been sufficient to drive SCHD’s overall returns in a market dominated by technology and growth stocks.

Additionally, the tax treatment of SCHD’s dividend income further erodes its appeal. The effective yield after taxes is lower than the advertised 3.83%, diminishing the net income investors actually receive. This tax drag, combined with outright underperformance, has led many to question whether SCHD’s ‘safe haven’ status remains justified. As investors reallocate capital to alternatives like VOO or individual dividend stocks, the ETF faces a critical period where it must either demonstrate improved performance or risk further erosion of its investor base.