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The Federal Reserve is expected to cut interest rates in September 2025, prompting a potential increase in demand for high-yield assets such as the Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD). Since its launch in 2011, SCHD has generated a return of 211.8% and offers an annual dividend of $1.03 per share, translating to a yield of 3.8%, which competes with the current U.S. ten-year Treasury yield.
Recent institutional activity reflects mixed signals regarding SCHD. While Bank of America and Raymond James reduced their stakes, Osaic Holdings and MML Investors Services increased their positions, highlighting a split strategy among investors. The ongoing debate centers on whether the Fed’s easing cycle will spur inflation or promote balanced growth.
SCHD also provides exposure to the energy sector, with major holdings including ConocoPhillips (NYSE: COP) and Chevron Corp. (NYSE: CVX). As inflation could drive oil prices higher, these investments could yield both capital appreciation and dividend income, making SCHD an attractive option for investors seeking stability amid economic uncertainty.
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