Covered, diversified, compounding — at a higher fee. A 3.66% trailing yield from the top 100 stocks in Morningstar’s Dividend Leaders Index — companies screened for a consistent record of growing dividends and the ability to sustain them — at a 0.45% expense ratio, with total return of about 28% over the past year. The payout is funded by the holdings’ dividends, not leverage or options.
Key risk: Single-name weight: the leaders screen still lets one name (Chevron, historically near a tenth of the fund) and the financials/energy tilt dominate, so one sector’s downturn moves this fund more than a broader dividend fund.
Changes if: Trailing-12-month distributions fall for two consecutive quarters, or the expense ratio rises materially. Quarterly amounts already range $0.40–$0.55, so watch the trailing total, not one quarter.
- ✓Yield check: 3.66% trailing — $1.94 of distributions over the trailing 12 months (Dec. 2025 $0.5499, Mar. 2026 $0.4005, Jun. 2026 $0.4732, Sep. 2026 $0.5139) at the $52.95 close on Oct. 23, 2026.
- !Expense check: 0.45% a year is 7.5 times SCHD’s 0.06%. Morningstar’s dividend-leaders screen is what the extra fee buys.
- ✓Payout / growth check: Distributions are ordinary dividends from 100 screened holdings with a record of growing payouts, and trailing total return is about 28% over the past year — the payout is on top of the return, not carved out of it.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.