Schwab's Dividend ETF's Worst Year Since 2012 Was a 5.5% Loss. The Cost Showed Up in the Good Years.
2026-10-11 10:22
•Daniel Sparks •The Motley Fool
•• ••••••• Axe Cap view
Dividend ETFs: Safety or Sacrifice?
Schwab's dividend ETF shields downside but costs upside, a lesson for South African cautious equity investors.
Schwab's Dividend ETF (SCHD) impresses with limited losses in bad years—only around 5.5% at worst since 2012—but it leaves serious returns on the table during bull markets. Over 14 years, $10,000 would’ve grown to $49,000 in SCHD versus $70,500 in the S&P 500. This defensive trade-off is stark. For South African investors, a similar mindset prevails in blue-chip counters like Sanlam or FirstRand, which offer steady dividends but haven’t matched growth stocks on the JSE or the global tech rally. The rand (USD/ZAR) often reflects risk appetite too; in risk-off modes, dividend payers are a refuge. But when the rand strengthens, more growth-focused names shine. The risk? Prolonged global calm and strong risk appetite would penalize defensive plays here. Stay ready to shift if South African equities begin to move higher beyond dividend yield stories. this is just our opinion and not financial advice
Keep a selective position in South African dividend payers like Sanlam and FirstRand for income stability. But don’t overweight; maintain some exposure to growth-oriented shares or rand strength plays to capture upside when risk-on returns. Watch USD/ZAR for signals to re-risk.
- Sanlam
- FirstRand
- USD/ZAR
- Prolonged global risk-on sentiment
- Rand appreciation reducing relative appeal of dividend stocks
6/10
The Schwab U.S. Dividend Equity ETF (SCHD) had only three losing years between 2012-2025, with its worst loss being 5.5% in 2018. While this defensive positioning protected it during market downturns like 2022 (down 3% vs S&P 500 down 18%), it significantly underperformed in rising markets. Over 14 years, $10,000 in SCHD grew to ~$49,000 compared to ~$70,500 in the S&P 500, demonstrating the trade-off between downside protection and upside participation.
Our take is based on reporting first published by The Motley Fool.