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In the age of meme stocks, moonshot tech plays, and crypto quick wins, it might seem out of character for a young investor to get excited about Coca-Cola (NYSE:KO), or Lockheed Martin (NYSE:LMT), or a dividend ETF that doesn't promise to 10x your money overnight.
But a revolution is quietly cooking in the portfolios of Gen-Z’ers and Millennials who follow the FIRE philosophy — Financial Independence, Retire Early. And large part of this movement is a tactic your financial advisor’s father may have suggested: dividend growth investing. In that context, Schwab US Dividend Equity ETF (NYSE:SCHD) is emerging as a solid contender for passive income investing.
Let’s explore the mood further. SCHD has a low 0.06% expense ratio, pays a 4% dividend yield, and owns stalwarts such as Verizon (NYSE:VZ), ConocoPhillips (NYSE:COP), and Coca-Cola. The fund is tightly rules-based, emphasizing only those firms with 10 years of dividend payment, good fundamentals, and heavy trading volume.
And that’s what attracts FIRE followers. The emotional roller coaster involved in pursuing meme tickers and “to the moon” mania is bound to lose charm, and young investors are constructing long-term portfolios intended to accumulate wealth quietly, sustainably, and with little drama.
The Philosophy
FIRE is not about instant wealth. It’s about working hard, investing harder, and retiring earlier than the conventional age of 65-70, on a self-directed, passive income stream robust enough to pay for everything.
Dividend growth investing checks all the boxes: It offers compounding income from quarterly payments, less volatility than high-beta growth stocks, protection against inflation as dividends rise with time, and sector diversification without the drudgery of selecting individual stocks.
And SCHD? It does it all, no Reddit forum necessary.
A Financial Workhorse
With assets of more than $67 billion and an average daily volume of more than 15 million shares, it’s a big player in the dividend ETF universe. Its top 10 holdings, such as Lockheed Martin, Cisco (NASDAQ:CSCO), and Verizon, are among the most financially secure U.S. corporations. And its built-in guardrails, such as a sector exposure cap (no more than 25%) and focus on return on equity (29.06% as of April 30), prevent it from crossing into dangerous territory.
Even during periods of market volatility, SCHD’s performance has been robust due to its mix of consumer staples, healthcare, and energy exposure. It’s not cool, but it’s reliable. And in a FIRE portfolio, that is a superpower.
Final Thought
In an era where financial news streams are dominated by AI chip makers and blockchain soap operas, SCHD is working its magic behind the scenes, assisting investors in achieving their objectives one dividend check at a time. For the next generation pursuing financial independence, and not merely flashy charts, it might be just the turtle that outpaces all the hares on the track.
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Image created using artificial intelligence via Midjourney.
