If you own SCHD, you already hold PepsiCo, Home Depot, and Verizon. But do you know why these PepsiCo Home Depot Verizon dividend plays rank among the fund's top holdings? Each brings a different strength, and understanding those differences can help you boost your dividend portfolio.
SCHD, the Schwab US Dividend Equity ETF, manages roughly $83 billion across 104 holdings. It screens for companies with at least 10 consecutive years of dividend payments, then weights by fundamental quality. Here is what each stock offers.
PepsiCo (PEP): Defensive Yield for Uncertain Markets
Why SCHD holds PepsiCo
PepsiCo is not just a soda company. It owns Frito-Lay, Quaker, Gatorade, and dozens of snack brands that generate revenue whether the market rallies or crashes.
PepsiCo has raised its dividend for 52 consecutive years, earning it "Dividend King" status. Only a handful of S&P 500 companies can match that streak.
The numbers
PepsiCo currently yields around 3.2%. Q1 2026 revenue came in at $18.3 billion, showing the scale behind those consistent payouts.
According to Schwab Asset Management, PEP ranks as SCHD's fourth-largest holding at 3.97% weight.
Who this stock suits
If your portfolio leans heavily into tech or growth names, PepsiCo adds stability. Consumer staples tend to hold up when cyclical sectors sell off.
Home Depot (HD): A Dividend Growth Compounder
25 years of consecutive increases
Home Depot yields roughly 2.5%, the lowest of these three. But the growth rate of those dividends tells a different story.
Home Depot has increased its payout for over 25 consecutive years. The company dominates home improvement retail in the U.S. and uses its pricing power to fund rising dividends year after year.
Check the valuation
Home Depot tends to trade at a premium because the market prices in that growth track record. Before adding shares, compare its current price-to-earnings ratio against its five-year average.
A higher valuation means you pay more per dollar of earnings, which affects your forward yield. Investors who understand how ETFs work will recognize this as the classic growth-versus-value tradeoff.
Who this stock suits
If you prioritize dividend growth over current yield, Home Depot fits. A 2.5% yield growing at double digits annually can compound into a much larger income stream over 10 to 15 years.
Already hold SCHD? Compare your individual stock exposure on Gotrade. Adding direct positions in top holdings like HD lets you overweight the names you believe in most.
Verizon (VZ): The Highest Yield in SCHD
6.5% yield with a 20-year track record
Verizon offers the highest yield of any major SCHD holding at approximately 6.5%. That is nearly double PepsiCo and more than double Home Depot.
Verizon has raised its dividend for 20 consecutive years. Its wireless subscriber base generates the massive cash flows that support those payouts.
Compare with AT&T before buying
Verizon's yield is high partly because its stock price has lagged. Before adding shares, compare Verizon's payout ratio and free cash flow coverage against AT&T. Both are telecom income plays, but their balance sheets tell different stories.
According to Morningstar, Verizon's 5G investments continue to pressure margins. That spending should support future revenue growth, but it means the dividend consumes a larger share of earnings today.
Who this stock suits
If you need income now, Verizon delivers the most immediate cash flow of these three. Monitor the payout ratio quarterly to make sure the dividend remains well-covered.
How to Build a Dividend Layer With These 3 Stocks
Three stocks, three roles
These three SCHD holdings serve distinct functions in a dividend portfolio.
PepsiCo provides defensive stability. Home Depot offers dividend growth. Verizon delivers high current income.
Owning all three creates a layered approach: one for safety, one for compounding, one for yield. That diversification across dividend strategies is what makes SCHD effective, and you can replicate it with individual positions.
Pair with SCHD or go direct
You do not have to choose between the ETF and individual stocks. Some investors hold SCHD as a core position and add extra shares of their highest-conviction names on top.
If you are learning how to invest in US stocks, starting with SCHD and gradually adding individual dividend stocks is a practical approach. You get broad exposure first, then refine as you learn which companies match your income goals.
Keep the balance in check
A common mistake is overweighting a single high-yield stock because the income looks attractive. If Verizon makes up 30% of your portfolio, a dividend cut would hit hard.
Review your positions periodically. Dividend stocks are not set-and-forget. Payout ratios and competitive dynamics shift over time.
Conclusion
PepsiCo, Home Depot, and Verizon each bring something different to a dividend portfolio. PepsiCo offers 52 years of reliability. Home Depot delivers compounding growth. Verizon pays the highest yield in SCHD at 6.5%.
Rather than choosing just one, consider how all three work together as a diversified dividend layer. Check your portfolio on Gotrade to review your current dividend exposure and compare these names against what you already hold.
FAQ
Is SCHD a good ETF for dividend investors?
SCHD screens for quality dividend stocks with 10+ years of consecutive payments and has roughly $83 billion in assets under management.
Which SCHD holding has the highest dividend yield?
Verizon (VZ) offers the highest yield among major SCHD holdings at approximately 6.5%.
Can I buy fractional shares of PepsiCo, Home Depot, or Verizon on Gotrade?
Yes, Gotrade lets you buy fractional shares of all three stocks starting from as little as US$1.
