🌍SCHY: Taking Dividend Power Global

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If you're a fan of the Schwab U.S. Dividend Equity ETF $SCHD ( ▼ 0.07% ) —and let's be honest, who isn't?—you've likely wondered: "Is there an international cousin that brings the same disciplined, quality-focused dividend strategy to the rest of the world?" Your answer is a resounding yes, and it is $SCHY ( ▼ 0.04% ) : the Schwab International Dividend Equity ETF.

In today's interconnected markets, true diversification goes beyond U.S. borders. While U.S. equities have dominated returns recently, global markets offer attractive valuations, unique sector exposures, and reliable income from established multinational companies. SCHY by Schwab is a low-cost solution for investors looking to access sustainable dividends from developed markets outside the U.S.

Let's explore what makes SCHY effective and determine whether it aligns with your ETF line-up and investment philosophy.

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What is SCHY?

Consider SCHY to be like SCHD’s well-travelled, globally minded sibling. While SCHD uses a thorough, multi-factor screening process to identify U.S. companies that consistently pay and maintain dividends, SCHY applies the same disciplined approach to companies in non-U.S. developed markets.

But SCHY isn’t just “SCHD with a passport.” This ETF is built on a thoughtful framework designed to identify quality, financial strength, and dividend sustainability in a more complex international landscape. The fund begins with a universe of large- and mid-cap companies in developed markets (e.g., Japan, the UK, Switzerland, Australia, France). From there, it applies a series of screens:

• 📅Dividend Consistency: Companies must have paid dividends for at least 10 consecutive years. This consistency requirement filters out firms with erratic payout histories or those that cut dividends during economic stress.

• 💪Financial Health: Metrics like cash flow to total debt and return on equity (ROE) are used to assess balance sheet strength and profitability.

• ⚖️Dividend Sustainability: The fund evaluates dividend payout ratios to ensure companies aren’t overextending themselves to maintain their yield.

• ➖Lower Volatility: Unlike many international ETFs that chase high yields at any cost, SCHY incorporates a low volatility screen. The criterion helps reduce downside risk and smooth out returns over market cycles.

The result? A portfolio of roughly 150 high-quality international companies that prioritise shareholder returns through consistent dividends—without sacrificing financial prudence.

Investment Strategy📊

SCHY can serve as either a core holding or a complementary piece in a well-rounded portfolio. Here’s how investors might use it:

• 🌐Core Dividend Strategy with Global Reach: Pair SCHY with SCHD, and you’ve got a powerful one-two punch of dividend-paying companies spanning the U.S. and the rest of the world. Together, they can serve as a backbone for an income-oriented portfolio.

• 🧩Diversification Booster: If your current portfolio is heavy in U.S. equities, SCHY offers a relatively simple way to add international exposure—without wading into riskier emerging-market ETFs or overly broad international funds.

• ⚔️Complement to Growth-Oriented ETFs: Investors with a growth-heavy portfolio can balance things out with SCHY’s steady dividend payers. This mix provides both growth potential and income stability.

• 🛡️Defensive Allocation: Because SCHY screens for financial strength and lower volatility, it can serve as a defensive allocation in uncertain markets, providing a cushion when global volatility spikes.

• 🎯Tactical Allocation During U.S. Overvaluation: When U.S. valuations appear stretched (as they often do), SCHY offers a compelling entry point into international markets that trade at more attractive price-to-earnings ratios—without sacrificing quality.

SCHY at a glance

ETF Issuer: Charles Schwab Asset Management

Inception: 2021-04-29

Asset Class: Equity

Underlying Index: Dow Jones International Dividend 100 Index (Net)

Geographical Focus: non U.S.

Expense Ratio: 0.08% (as of last data point)

Dividend Yield: 3.69% (as of last data point)

Distribution Frequency: Quarterly

Historical Performance

SCHY was launched in April 2021, which means it doesn’t yet have the decades-long track record of SCHD. However, we can still examine its brief history and compare it to benchmarks.

• Performance Since Inception: SCHY has delivered returns broadly in line with international dividend equity markets, with some periods of outperformance during volatile conditions, thanks to its quality and volatility screens.

• Dividend Yield: SCHY typically offers a yield in the 3–4% range, attractive for income-focused investors.

• Comparisons: While SCHD has been a U.S. superstar, SCHY provides exposure to markets that don’t always move in sync with U.S. equities, offering diversification benefits.

Of course, it’s worth noting that international equities have generally lagged U.S. equities over the past decade—but cycles change, and the next decade could favour global diversification.

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. High-Quality International Exposure at Minimal Cost: SCHY is one of the cheapest ways to access a portfolio of financially sound, dividend-paying international companies. You’re getting Schwab’s rigorous screening process without paying premium fees—unlike many actively managed international income funds.

2. Attractive Valuations and Higher Yields: International developed markets have lower price-to-earnings ratios and higher dividend yields than the U.S., and SCHY helps you capitalise on this gap by focusing on companies with reliable dividend discipline, steering clear of unsustainable dividends.

3. Risk Management Built In: By screening for lower volatility and financial stability, SCHY avoids the riskiest international dividend payers, helping reduce exposure to potential “dividend traps.”

Top 3 Reasons Not to Invest

1. No Emerging Markets Exposure: SCHY excludes high-growth emerging economies. If you believe in the long-term potential of countries like India or Vietnam, SCHY alone won’t capture that opportunity. You’ll need a separate EM allocation.

2. Underperformance During U.S. Tech Rallies: In bull markets driven by U.S. mega-cap tech, such as the current one (2023-present), SCHY may lag significantly. Investors seeking maximum growth during such regimes might find SCHY “too defensive.”

3. Concentration in Certain Sectors and Countries: As of mid-2025, SCHY’s top country exposures include the UK (~15%), Australia (~12%), France (~11%) and Switzerland (~9%). Sector-wise, financials, industrials, and consumer staples are the dominant sectors. This concentration can lead to underperformance if these regions or sectors fall out of favour.

📈Dividends Without Borders

The Schwab International Dividend Equity ETF (SCHY) provides investors with a disciplined approach to accessing the world of dividend-paying companies outside the U.S. Modelled after the ever-popular SCHD, SCHY focuses on dividend sustainability, financial strength, and lower volatility, making it a strong candidate for those seeking to balance U.S. holdings with international exposure.

Although SCHY is a relatively young fund, investing internationally carries unique risks; however, it’s worth considering for those seeking diversification, income, and quality. In a market where high yields can hide risks, SCHY underscores the importance of patience and discipline in dividend investing, whether the stocks are from London, Tokyo, or Zurich.

We believe knowledge is power. If you're interested in global dividend investing, think about how SCHY could fit into your portfolio. Our community thrives on shared insights, so join us for actionable advice, model portfolios, and expert analysis to enhance your ETF investments. Whether you're refining your core holdings or exploring new strategies, ETF UNO is your trusted co-pilot.

DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.