By The Schwab US Dividend Equity (SCHD) stock price staged a bullish breakout above a key resistance level as American equities accelerated. SCHD jumped to a high of $28.10, its highest level since November 2024. It has soared by 20% from its lowest level in 2025.
Why the SCHD ETF stock underperformed the broader market
The SCHD ETF stock price experienced a total return of 7% in the last 12 months, much lower than the S&P 500 Index’s growth of 17.6%. This divergence happened because of its constitution.
The Schwab US Dividend Equity lagged behind the mainstream fund because it is made up of traditional companies. According to its website, energy represents the biggest share in the fund and is followed by consumer staples, health care, industrials, and financials.
The top names in the funds are energy giants like Chevron, ConocoPhillips, Lockheed Martin, Merck, Verizon, and Bristol Myers Squibb.
On the other hand, the mainstream funds like QQQ and SPY are mostly made up of technology companies like Nvidia, Apple, and Microsoft that are benefiting from the artificial intelligence (AI) industry.
The fund also experienced weak inflows because of its low dividend yield and growth. Data shows that the fund has a dividend yield of just 3.75%, lower than what government bonds are offering.
SCHD ETF will likely continue doing well this year as American equities continue their bull run. For one, the Federal Reserve is expected to cut interest rates several times this year as inflation continues moving downwards.
Lower interest rates often boost the stock market, especially the risky technology companies that dominate the S&P 500 and the Nasdaq 100 indices.
The fund will also benefit from the potential earnings growth, with most analysts expecting American companies to continue growing this year. Data compiled by FactSet shows that the S&P 500 Index experienced double-digit growth rates in the last four consecutive quarters.
At the same time, the ETF may experience demand as investors rotate from the risky technology industry to value names. Odds of this rotation has jumped as some investors predict that the AI bubble will burst this year.
Schwab US Dividend Equity stock has formed a bullish pattern
Technical analysis suggests that the SCHD ETF has more upside in the coming weeks. The daily chart shows that the stock has formed an inverse head-and-shoulders pattern, which often leads to more upside over time.
This pattern’s head is at $23, while the two shoulders are at $25, and the neckline is at $27. It has also remained above the 50-week and 100-week Exponential Moving Averages (EMA).
The SCHD ETF has also retested the ultimate resistance level of the Murrey Math Lines tool at $28. It is also slightly above the Supertrend indicator.
Therefore, the most likely scenario is where the stock continues rising, with the next key resistance level to watch being at $30, which aligns with the extreme overshoot level of the Murrey Math Lines tool.
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