SCHD is a top-five, indispensable holding: up 27% this year versus only 11% for SPY excluding dividends, with a 0.06% expense ratio and holdings screened on cash flow, profitability, yield and growth rather than yield alone. Its non-tech sector mix balances a tech-heavy portfolio, though it overlaps HDV.

The first fund, as expected, is the SCHD or Schwab US Dividend Equity ETF. If you have been following my channel for a while, you know that this fund is among the top five investments in my portfolio.

Returning to SCHD, it's interesting that many of you understand why I own it and why it's among my top five investments. But on the other hand, many people criticize me harshly for owning it.

I see comments like: "Mark, do you own this ETF? Its growth is much slower. Mark , the fund doesn't adequately cover the technology sector ."

Okay, now we see the real reason why I own SCHD. Look at the difference this year between SCHD and the S&P 500. SCHD has risen 27% this year, while SPY has risen only 11%, and this return for SCHD does not include any distributed dividends.

SCHD is not just an ordinary dividend exchange-traded fund for me, but a fund that specializes in this area. The fund focuses on well-established US companies with a long history of dividend payouts.

But most importantly, this fund does not just buy stocks with the highest dividend yields , but also evaluates fundamental factors designed to identify companies with the strongest financial characteristics.

This includes metrics related to cash flow, profitability, dividend yield and growth.

I prefer this approach because a high dividend yield in itself is not necessarily a positive thing. Sometimes, a stock's return is high because its price has fallen significantly, and this can be a serious warning sign.

I prefer to own shares in companies that generate sufficient cash flow to support their dividend payouts and potential future increases. This is one of the reasons why SCHD funds are popular among dividend investors .

Now, let's take a closer look at SCHD, which I call a low-cost exchange-traded fund. The expense ratio is only 0.06%, meaning that for every $10,000 invested, the fund's annual expenses are about six

From the perspective of the investment portfolio, let's start by analyzing the sectors. As you can see, the largest sectors include healthcare, basic consumer goods , technology, and energy.

Looking at the best-performing sectors over the past month, we find that three of these four sectors, excluding technology, were at the forefront, which explains the good performance of the SCHD fund.

It gives me balance. I can confirm that SCHD is a valuable addition to a technology-focused investment portfolio , the S&P 500, and the three major economic indices. So , for me and my portfolio , it is not only among the top five investments, but it is also an indispensable investment in my view.

The fund itself includes approximately 100 companies. And now, here's the interesting part . Let's take a look at some of the biggest of these investments. We have Texas Instruments and Qualcomm, both of which are technology companies.

Then we have Procter & Gamble, Coca-Cola, Chevron, Merck, Amgen, UnitedHealth Group, Home Depot, Verizon, and ConocoPhillips.

So, while technology stocks suffered , funds like HDV and SCHD benefited from diversifying their investments into other sectors of the market, and that is precisely what makes me think they are a valuable addition to development-oriented investment portfolios.

Now, let's put these two exchange- traded funds (ETFs) together. You might be wondering: if both SCHD and HDV are dividend-paying ETFs, why would I own them both ? That's a valid question.

Here's how I think about it: The SCHD fund focuses on dividend-paying companies, which are selected using a combination of yield, earnings growth and key financial metrics.

SCHD currently has a significant stake in companies such as Texas Instruments, Qualcomm, Coca-Cola, and Home Depot.

Therefore, there is an overlap between them. Both funds own companies such as Chevron, Procter & Gamble, and Verizon. Therefore, owning both does not double the diversification of your portfolio.

This is something I want investors to understand.

For me, the SCHD fund offers an opportunity to invest in established, dividend-paying companies with a focus on growth. Therefore, when I combine these investments, i.e., these two funds with my large investments in the technology sector, ETFs, and individual stocks, I believe that creates a more balanced portfolio.

The technology sector remains my biggest investment. However, this achieves more balance.

For this reason in particular, SCHD and HDV stocks remain among my most important investments.