Meet the Dividend ETF With Big Stakes in These 3 Blue Chip Stocks | The Motley Fool

Dividend Equity ETF holds 102 financially strong stocks, including household names like Coca-Cola (KO), Chevron (CVX), and Home Depot (HD).

High-yield dividend stocks are often a place that investors turn to for steady income and potential safety from stock market sell-offs. The stocks held by dividend exchange-traded funds (ETFs) tend to be financially strong, well-established companies that can weather a downturn in the economy.

One of the most popular dividend index funds is the Schwab U.S. Dividend Equity ETF (SCHD +1.32%). This fund holds a mix of 102 dividend stocks from a range of industries. A few of SCHD's biggest holdings are well-known blue chip stocks like Chevron (CVX -1.41%), Coca-Cola (KO +0.44%), and Home Depot (HD +3.83%) -- household name companies that have paid steady dividends for many years.

If you want to buy Coca-Cola, Chevron and Home Depot shares as part of a diversified dividend-focused portfolio, the SCHD fund is an easy, low-cost way to do it. But not all blue chip stocks are equally likely to succeed in today's complex economic environment.

Let's look at these three blue chip stocks in the Schwab U.S. Dividend Equity ETF portfolio and see why this fund can be a good buy -- even if some of its holdings underperform in the short run.

SCHD: 3.24% dividend yield, 10 years of 12.4% annualized returns

The Schwab U.S. Dividend Equity ETF ranks as one of the best dividend index funds, because it pays strong dividends. This fund's trailing 12-month yield was 3.24% as of Sept. 30. That's more than three times the 1.05% yield paid in the past 12 months by the S&P 500 index. And it charges an ultra-low expense ratio of 0.06%.

SCHD has delivered annualized returns of about 12.4% in the past 10 years, about 9.5% in the past five years, and 23.4% in the past year.

SCHD Schwab U.S. Dividend Equity ETF

$34.16+$0.45 (+1.32%)

Averytin News Financial update.