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3 Super Schwab ETFs to Buy Now

Barchart·09/05/2026 20:00:02

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Schwab's exchange-traded funds (ETFs) don't get much in the way of media attention, but that doesn't mean they don't deserve our attention.

Building a comprehensive, diversified portfolio of investments has never been simpler than it is today. And it's never been cheaper, either. In fact, one of the most difficult choices left on our plate is deciding which of several low-cost fund providers we want to provide the foundation of our investing accounts. ("Oh no, my lobster is too buttery and my steak is too juicy!")

However, while several names might come to mind before Charles Schwab, you might want to consider "Chuck" anyways. That's because while Schwab ETFs only number around 30 or so, they're among the lowest-cost products on the market, and they largely tend to earn strong ratings from analysts who cover funds.

Let's look at some of the best Schwab ETFs you can buy right now. I'll touch on funds that address a variety of core investment needs, which each providing you access to hundreds if not thousands of securities within that space for a low annual cost.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

The Best Schwab ETFs to Buy Now

I'm writing this article about the best Schwab ETFs to buy if you're trying to address basic portfolio needs across stocks and bonds.

I say that so you understand this isn't an exhaustive list of every fund you'd want for, say, swing trading or day trading. It's just a smart place to start if you want to build a buy-and-hold portfolio using Schwab ETFs.

In addition to important data information such as dividend yield and expense ratio, I've listed Morningstar's Medalist and Star ratings for each ETF. Morningstar's Medalist rating is a forward-looking analytical view of the fund, while Morningstar's Star rating is a backward-looking view that measures a fund's risk-adjusted return vs. its peers. Every fund on this list has a minimum Medalist rating of Silver and Star rating of 3 (out of 5).

Here are three picks from my broader article about the best Schwab ETFs to buy.

Schwab U.S. Large-Cap ETF

Style: U.S. large-cap stock
Assets under management: $74.8 billion
Dividend yield: 1.0%
Expense ratio: 0.03%, or 30¢ annually on a $1,000 investment
Morningstar Medalist rating: Gold
Morningstar Star rating: 4 stars

We live in the U.S., so naturally, we're told to build our portfolio cores around large-cap U.S stocks.* That large-cap stock exposure will often come from an index fund tracking the S&P 500—a collection of 500 major U.S. businesses, and a proxy for the American stock market. That's why three of the biggest fund providers—Vanguard, State Street, and BlackRock's iShares—offer up ETFs that track this ubiquitous index.

Schwab doesn't. Instead, it provides something similar with the Schwab U.S. Large-Cap ETF (SCHX).

SCHX doesn't track the S&P 500, but instead the Dow Jones U.S. Large-Cap Total Stock Market Index. Why not just offer an S&P 500 fund? Well, at the time Schwab's ETF was launched, using this index allowed the firm to keep costs extremely low—at inception in 2009, SCHX was at least as cheap, if not cheaper, than any of the S&P 500 ETFs.

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Schwab U.S. Large-Cap ETF holds 750 U.S. large-cap stocks, so you're enjoying even broader exposure than what you'd receive from an S&P 500 ETF. Of course, 97% of the S&P 500's stocks are in SCHX. Additionally, like S&P 500 trackers (and many other index funds), Schwab's fund is "cap-weighted," meaning the bigger the stock, the more of it SCHX holds—blue-chip names like Nvidia (NVDA), Apple (AAPL), and Google parent Alphabet (GOOG/GOOGL) are currently among the ETF's top dogs. In fact, more than 90% of SCHX's "weight" (the percentage of the fund's assets dedicated to a specific holding) is placed in S&P 500 holdings.

Put differently? While SCHX doesn't track the S&P 500, it's really similar.

Since Schwab U.S. Large-Cap ETF launched, other fund providers have lowered the expenses on their S&P 500 ETFs, so while SCHX is still cheaper than many similar funds, it doesn't have a cost edge over as many funds as it used to. Performance is generally close to the S&P 500, though long-term it has marginally underperformed. Regardless, it remains one of Schwab's best ETFs: a straightforward and dirt-cheap way to address one of the most crucial aspects of your portfolio.

* There are different ways to define "cap" levels. We're adhering to Morningstar's definition, which says the largest 70% of companies by market capitalization within a fund's "style" are large caps, the next 20% by market cap are mid-caps, and the smallest 10% by market cap are small caps.

Schwab U.S. Dividend Equity ETF

Style: U.S. dividend stock
Assets under management: $113.3 billion
Dividend yield: 3.0%
Expense ratio: 0.06%, or 60¢ annually on a $1,000 investment
Morningstar Medalist rating: Gold
Morningstar Star rating: 3 stars

Not all equity returns come from stock prices increasing—dividends often play an important role, too.

Dividends are cash payments that companies make to its shareholders. They're a vital source of return for stocks, especially when prices are flat or down. They can be reinvested to compound your returns over time (over longer time periods, dividends have accounted for roughly 40% to 50% of equity returns). And once you hit retirement, that investment income can be used to pay your regular bills.

While you could try to get that exposure by picking individual dividend stocks, you could also diversify your risk across hundreds of payers via a dividend ETF like the Schwab U.S. Dividend Equity ETF (SCHD).

This Schwab index ETF holds around 100 dividend stocks selected for their high yields, track records of consistent dividend payments, and relative strength of their financial fundamentals. Specifically, SCHD requires its components to have paid dividends for at least 10 consecutive years, and it measures them based on yield, five-year dividend growth rate, return on equity (RoE), and free cash flow (FCF)/total debt.

Schwab U.S. Dividend Equity ETF skews large-cap, at about 75% of the portfolio, but mids are decently represented at roughly 20% of assets. Small companies occupy the remaining sliver. The fund also holds a number of Dividend Aristocrats—companies that have raised their dividends on an annual basis for at least 25 consecutive years—such as Chevron (CVX) and PepsiCo (PEP). And it even holds a few Dividend Kings (50-plus years) including Abbott Laboratories (ABT), Coca-Cola (KO) and Procter & Gamble (PG). These stocks help SCHD throw off a sizable annual yield of 3% currently, which is triple what you'd earn from holding an S&P 500 fund.

"Schwab U.S. Dividend Equity ETF stands out for its sensible, transparent, and defensive approach," Morningstar Associate Analyst Brian Paoli says about this Gold-rated fund. "The Dow Jones US Dividend 100 Index, which this fund tracks, includes 100 stocks that have a proven track record of dividend growth and stability. By requiring a minimum of 10 years of uninterrupted dividends and five years of stable dividend growth, the index has naturally favored stocks that have a healthy financial history."

This all makes SCHD one of the best Schwab ETFs to buy if you want higher-than-average yield while still paying a low fee.

Schwab Short-Term U.S. Treasury ETF

Style: U.S. short-term government bond
Assets under management: $15.2 billion
SEC yield: 4.3%
Expense ratio: 0.03%, or 30¢ annually on a $1,000 investment
Morningstar Medalist rating: Gold
Morningstar Star rating: 3 stars

As a general rule, the longer a bond's maturity, the higher the risk. Think about it: If you buy a two-year bond from a financially strong company, you'll be pretty confident it can repay that bond in full. However, if you buy a 20-year bond from that same company … sure, you might still have plenty of faith in the company, but 20 years is a lot longer for something to go wrong. As a result, issuers typically have to offer higher yields to convince investors to take that added risk.

Short-term bond funds, then, typically offer investors a relatively safe place to invest while earning a modest amount of income.

The Schwab Short-Term U.S. Treasury ETF (SCHO) further ratchets down risk by holding only short-term debt from the U.S. Treasury—an institution that enjoys some of the highest debt ratings on the planet given their long history of paying back its debtors. This Schwab ETF currently invests in almost 100 different Treasury issues with an average maturity of two years. Its duration of just 1.9 years means that if interest rates rose a full percentage point, SCHO's price would decline by a mere 1.9%.

Also worth noting: The "yield curve" was inverted (meaning short-term rates were higher than long-term rates) for a two-year stretch that started in 2022. While the inversion ended in 2024, SCHO still offers a yield of more than 4%, which is mighty competitive given its relatively modest risk profile. That's only a little less yield than SCHZ, which has a significantly longer average maturity and a much higher level of interest-rate risk.

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If you're buying a fund you plan on holding for years (if not forever), you want to know you're making the right selection. And Morningstar Investor can help you do that.

Morningstar Investor provides a wealth of information and comparable data points about mutual funds and ETFs—fees, risk, portfolio composition, performance, distributions, and more. Morningstar experts also provide detailed explanations and analysis of many of the funds the site covers.

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