Financial analysts identify portfolio overlap as primary risk for SCHD investors

Financial analysts have identified the biggest mistake investors make with SCHD, a popular dividend ETF from Schwab. The fund holds over $121 billion in assets and charges a very low fee of 0.06 percent. Its top holdings include Texas Instruments, Chevron, and ConocoPhillips.

The main problem is that many investors already own shares in companies that SCHD holds. When this happens, they end up with too much money in the same stocks without realising it. This creates hidden risk in their portfolio.

A second mistake is choosing ETFs only because they pay a high dividend now. A higher current payment does not always mean better long-term growth. SCHD only considers companies that have paid dividends for at least ten years in a row.