SCHD Gains Buy Rating as Dividend ETF Valuation Improves

The Schwab U.S. Dividend Equity ETF has been upgraded to a Buy rating after a period of heavy selling, with Seeking Alpha analyst JR Research citing the fund’s strong dividend holdings, discounted valuation and signs that market pressure may be easing.

According to Seeking Alpha, SCHD has faced pressure as income-focused investments declined during the third quarter and continued weakness into the fourth quarter. The fund’s 3.2% yield has become less competitive as long-term bond yields have risen.

The analyst said SCHD remains supported by its portfolio of mature companies that pay dividends and maintain financial resilience. The ETF currently trades at less than 14 times forward earnings, below the valuation level of the broader S&P 500, according to the report.

JR Research, an opportunistic investor and author of the Seeking Alpha analysis, said recent market activity indicates that selling pressure around SCHD may be approaching its lowest point as broader economic challenges begin to ease.

The analysis noted that dividend stocks, income investments and traditional balanced portfolios have experienced significant declines, creating pressure across several areas favored by income-oriented investors.

Seeking Alpha reported that JR Research focuses on identifying investment opportunities through price action analysis combined with company fundamentals. The analyst also disclosed a beneficial long position in SPY through stock ownership, options or other derivatives.

The report included disclosures that past performance does not guarantee future results and that the analysis reflects the author’s own opinions. Seeking Alpha also stated that its analysts are third-party contributors who may not be licensed or certified by regulatory bodies.