Fund Evaluator:

Schwab Dividend Equity Overview

Schwab Dividend Equity (SWDSX) is an actively managed U.S. Equity Large Value fund. Schwab Funds launched the fund in 2003.

The investment seeks current income and capital appreciation. Under normal circumstances, the fund invests at least 80% of its net assets (including, for this purpose, any borrowings for investment purposes) in dividend paying common and preferred stocks. It primarily invests in U.S. companies, but may invest up to 20% of its net assets in the stocks of publicly traded companies located in countries other than the United States. The fund may invest in derivatives, principally futures contracts, primarily to seek returns on the fund’s otherwise uninvested cash assets.

About Schwab Dividend Equity (SWDSX)

There are 3 members of the management team with an average tenure of 7.70 years: James Serhant (2021), Wei Li (2013), Bill McMahon (2021). Management tenure is more important for actively managed funds than passive index funds.

The fund has 2 primary benchmarks: S&P 500 (TR) (1970) index with a weighting of 100% and Russell 1000 Value TR USD index with a weighting of 100%. Schwab Dividend Equity has 66 securities in its portfolio. The top 10 holdings constitute 32.6% of the fund’s assets. The fund meets the SEC requirement of being classified as a diversified fund. The fund is not considered to have an ESG focus with its investment selection and management.

Schwab Dividend Equity is part of the Equity global asset class and is within the U.S. Equity fund group. Schwab Dividend Equity has 0.0% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 99.1%. There is 0.0% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 0.0% (0.0% domestic bond, 0.0% foreign bond and 0.0% convertible bond). Schwab Dividend Equity has 0.9% of the portfolio in cash.

Assets Under Management

The fund has $663 million in total assets, which is below the $1 billion average for the Large Value category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

SWDSX Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The Schwab Dividend Equity expense ratio is high compared to funds in the Large Value category. Schwab Dividend Equity has an expense ratio of 0.89%, which is 4% lower than its category average, making the fund expense ratio grade a C. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. Schwab Dividend Equity has a portfolio turnover rate of 8%, indicating that holds its assets around 0.1 years. By way of comparison, the average portfolio turnover is 62% for the Large Value category.

Recently, in the month of July 2026, Schwab Dividend Equity returned 3.7%, which earned it a grade of B, as the Large Value category had an average return of 2.9%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all funds in that category.

Schwab Dividend Equity has a trailing yield of 1.51%, which is above the 1.20% category average. The fund normally distributes its income quarterly and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

Schwab Dividend Equity Grades

Year to date, the fund has returned 11.7%, 2.6 percentage points worse than the category, which translates into a grade of D. The fund has returned 19.6% over the past year (grade of D), 15.5% over the past three years (grade of C) and 10.2% per year over the past five years (grade of D) and 9.6% per year over the past 10 years (grade of F).

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