Key Points
-
The Schwab U.S. Dividend Equity ETF (SCHD) is one of the best ETFs out there for generating durable high yields.
-
Most people can start by investing a few hundred dollars a month, which is more than enough.
-
Here’s how much a modest $250 monthly investment into SCHD can create in dividend income.
- 10 stocks we like better than Schwab U.S. Dividend Equity ETF ›
How much dividend income could a modest $250 monthly investment realistically produce by 2040?
It would be much easier, of course, if you just had $100,000 to drop into the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). Then you could start generating hundreds of dollars a month in passive income right away.
Missed AI’s “Act 1”? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
Most people don’t have that much. For many investors, buying shares regularly over many years is the path to long-term wealth creation.
Source: Getty Images.
Unfortunately, those initial investments won’t generate much. This ETF currently offers a 3.3% annualized yield, which means you’ll earn less than $1 a month for every $250 invested for the first several months.
But it’s when your portfolio starts accumulating into a substantial sum over time, with each additional $250 monthly buy-in, that your account balance and passive income stream really start to grow.
After 12 months, you’ll have $3,000 invested, which would generate around $100 in annual dividend income at its current yield. By the time you get to 2040, approximately 16 years from now, you’ll have invested a total of $42,000 into the fund. If the yield is still 3.3% at that point, that translates to a monthly dividend of $115 or nearly $1,400 per year.
Not bad for adding just $250 a month over an extended period!
Remember, too, that if you reinvest those dividends back into the Schwab U.S. Dividend Equity ETF and accumulate more shares, your income stream grows even faster. It’s not unreasonable to think that, given that many years and that many dividend reinvestments, you could generate closer to $150 a month or more.
The key to achieving this is consistent monthly investing, no matter whether the stock market is going up or down. Do that for the next 14 years (or longer), and you’ll have built an impressive passive income stream.
Should you buy stock in Schwab U.S. Dividend Equity ETF right now?
Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab U.S. Dividend Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $383,680!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,382,954!*
Now, it’s worth noting Stock Advisor’s total average return is 937% — a market-crushing outperformance compared to 214% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of September 28, 2026.
David Dierking has positions in Schwab U.S. Dividend Equity ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
