Could see where you are coming from.//@OutsiderLEO:5% Treasury does not automatically kill SCHD, the yield gap just matters more now. For long holders this still looks like short term noise lol
SCHD's issue with rising Bond Yields. Know it.
@JC888：
Hi, this is sort of like a follow up to my previous post on $Schwab US Dividend Equity ETF(SCHD)$ posted on 05 Aug 2026. click here ! to refresh or read if you haven’t come across the previous post. The main reason I am writing a follow-up post is that rising Treasury yields are flashing a sign that everyone should know about. Without further ado, here’s the update. The income trade that beat the S&P 500 by double digits in 2026 just hit a new hurdle that could change what shareholders earn. The 10-year Treasury yield topped 5% on 15 Sep 2026, for the first time since 2007, marking a milestone last briefly touched intraday in October 2023 . According to Motley Fool, it sent shockwaves through dividend-paying stocks across the market. As reported by Benzinga, SCHD has dropped roughly -5.7% from its August 2026 record of $35, settling near $33 as bond yields surge, (see below) As of 02 Oct 2026 closing The fund holds roughly $100 billion in net assets and ranks as America’s largest dividend-focused ETF, Schwab data confirmed. Despite the sell-off, net inflows into the fund have topped $18.2 billion over the past 6 months alone, TipRanks data showed. The gap between falling prices & rising demand has left income investors weighing whether the pullback marks a buying opportunity or the start of a deeper repricing ? SCHD’s kryptonite is above 5% Treasury yields. On 16 Sep 2026, US Fed raised its benchmark rate by 25 basis points (or +0.25%), its first increase since 2023, and longer-duration yields have climbed sharply since, CNBC reported. According to Ned Davis Research shared by Schwab chief investment strategist, Liz Ann Sonders: Very few companies in the S&P 500 currently offer a dividend yield higher than the 10-year Treasury rate. In fact, fewer than 4% of these companies pay out a return that beats that government bond rate. The decline has not been isolated to SCHD, as the broader dividend-stock universe has felt the same gravitational pull from rising bond yields. Yardeni Research, President, Ed Yardeni has warned that the yield’s breakout above 5% poses the most immediate danger to equity valuations across the board, as reported by Benzinga. As a result, Yardeni cut his year-end 2026 S&P 500 price target from 8,400 to 7,900, a roughly -6% reduction, citing higher-for-longer bond yields and rising downturn risks over the next 3 - 6 months. Strong fundamentals give SCHD a case even as yields surge Despite the competitive pressure from bonds, the fund’s underlying numbers tell a more nuanced story than the recent sell-off suggests. As highlighted by GuruFocus - SCHD trades at a trailing price-to-earnings (P/E) ratio of about 17.87, below the S&P 500’s trailing P/E of roughly 26.37. This gives the fund a meaningful valuation discount against the broader market. Its March 2026 reconstitution added $Abbott Laboratories(ABT)$, $UnitedHealth(UNH)$, and $Procter & Gamble(PG)$, while cutting Energy exposure by -8%. Healthcare and Consumer staples now account for roughly 41% of the portfolio, anchoring the fund in sectors that tend to hold up during recessions. Morningstar, Associate manager & Research analyst, Brian Paoli described SCHD’s approach as “sensible, transparent, & defensive” in his 25 Apr 2026, review of the fund. The fund does not own shares in NVDA, MSFT, or AAPL. By avoiding them, SCHD stays away from the risk of relying too heavily on a few large tech stocks, a danger that prominent market figures, such as Bridgewater founder Ray Dalio, have warned about. Technical indicators near $32 suggest a potential floor The Relative Strength Index (RSI) for SCHD has fallen to 28 over the past 10 days, crossing below the oversold threshold of 30, ETF Database data showed. SCHD with MML tech indicator A critical support level near $32 aligns with the Murrey Math Lines (MML) pivot point that has marked prior turning points, Benzinga’s analysis indicated. (see above) A hold above that level would signal the decline is a temporary pullback, with $34 as the next meaningful resistance target. Benzinga’s technical analysis (using Murrey Math Lines (MML)) shows thatSCHD has critical support near $32, a key level that has triggered price reversals in the past. A hold above $32, will suggests the recent drop is just a brief pause before the stock potentially climbs toward $34, which is the next meaningful resistant hurdle that needs to clear. Comparison - SCHD’s dividend growth vs fixed Treasury yields The technical case points to a floor near $32, but the decision for income investors hinges on what each option pays over time. A 5% yield on a government bond offers a guaranteed return that stays fixed once purchased. Downside is it does not adjust for rising living costs. Meaning inflation can erode actual buying power of that money over time. SCHD’s income stream has grown in each of the past 14 consecutive years, a record no fixed-rate bond can match over that horizon. That compounding advantage has driven the fund to a total return above 61% over 5 years, a pace that bonds have not matched, as confirmed by Schwab’s performance data. Across the wider stock market, dividends have provided a significant portion of investor returns. For instance, out of the S&P 500's average yearly return of 10.7% over that same period, dividends contributed about 3.2% of that gain. According to ClearBridge Investments, MD & Portfolio Mgr, Michael Clarfeld, when evaluating a dividend payer, (a) dividend growth, (b) total return, and (c) risk, all matter alongside current yield. Furthermore, Schwab Asset Management has confirmed, SCHD only charges an expense ratio of 0.06%, a cost that barely registers next to most actively managed income strategies. Investor’s income strategy vs SCHD’s $32 support line ? Yardeni’s warning about bond-yield headwinds and Clarfeld’s case for dividend growth over headline yield, frame both sides of the decision that shareholders face. The tension between rising bond yields and SCHD’s compounding dividend advantage defines the near-term risk profile for shareholders. Benzinga’s analysis indicated, fund’s valuation discount, record inflows, and oversold technical readings - all suggest the retreat is more likely to stabilize than extend further. Again, a sustained hold above $32 would confirm the pullback as a temporary dip and take the deeper repricing scenario off the table. Trajectory of the 10-year yield remains the unresolved variable, because a sustained climb above 5% would extend the drag on income-generating equities broadly. The Federal Reserve’s next rate decision and incoming inflation data are the two catalysts most likely to determine the outcome, Benzinga’s analysis concluded. Wrapping up, Benzinga's analysis concluded that 2 main catalysts will decide what happens next: what the Federal Reserve decides to do with interest rates, and the new inflation reports that come out. Wrapping up, Benzinga’s analysis concluded that 2 main catalysts will determine whether SCHD stabilizes above $32 or undergo a deeper repricing: US incoming CPI inflation readings on 14 Oct 2026. US Fed’s next rate decision on 28 Oct 2026. My viewpoints: (mine only) I think the newsprint message is clear. The current high Treasury yields (5%+) has become a headwind for dividend ETFs like SCHD, making it look less compelling because investors can get similar or better income from Treasuries that is guaranteed and without equity risk. The more subtle and unmentioned subtext is falling yields would improve SCHD’s relative appeal. Meaning, as and when Treasury yields decline, dividend stocks will regain their advantage, as their yields stand out again compared to bonds. That would likely be a more favourable environment to once again “load up” on SCHD. Putting the postulation to test, I had co-pilot come up with a comparison between SCHD dividend yield vs US Treasuries’ different rates. (see below) Yes, falling Treasury yields improve SCHD’s relative appeal: At 5%, Treasuries dominate on yield. At 4.5%, the gap is smaller. At 4%, SCHD’s combination of yield + equity upside looks compelling. SCHD’s sell-off captures a broader income-investing dilemma: Accept the certainty of elevated bond yields today, or Tolerate equity volatility for an income stream that can potentially grow over time. The key question is whether higher yields are a lasting structural problem for dividend ETFs or a cyclical headwind that will fade as rates eventually decline. If bond yields retreat, SCHD’s combination of dividend growth, valuation support and equity upside could look far more compelling again. For now, SCHD is a test of investment horizon: Short-term traders are watching yields and technical support. Long-term investors are weighing temporary pressure against the value of compounding income. Looks like investing in dividend ETFs is not as straight forward as thought of initially. Agree ? Remember to check out my other posts. (See below). Help to Repost ok, Thanks. Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks. SoFi - Growth, Risk and Next phase. Buy ? NVDA’s $150B Buyback: Bold or Risky ? Anthropic IPO leak affects NVDA, AMZN +... ? Do you think you will still consider SCHD only when US Treasury falls ? Do you think SCHD is still a better bet than $Fidelity High Dividend ETF(FDVV)$ ? If you find this post interesting, give it wings! ️ Repost and share the insights ? Do consider “Follow me” and get firsthand read of my daily new post. Thank you. @Daily_Discussion @TigerPM @TigerStars @Tiger_SG @TigerEvents
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