SCHD Through the Pandemic Sell-Off and Recovery

The 2020 pandemic crash produced SCHD’s worst quarter on record. According to Schwab’s SEC filings, the fund’s net asset value fell 21.55% in the first three months of 2020, and from its January high to its low on 23 March, its share price fell by around a third.

It also produced SCHD’s best quarter. The fund gained 17.11% in the last three months of 2020, finished the year up 15.11% and paid more in dividends than in any previous year, even after five of its companies suspended their payments.

FRC’s How to Invest in SCHD course is built from Schwab’s own SEC filings and S&P Dow Jones Indices’ index rules, and examines how SCHD behaved in every major market decline since it launched. The course page has a short video you can watch to decide whether the course is right for you.

This guide is part of FRC’s complete guide to SCHD, which starts with what SCHD is and how it works. FRC’s guide to SCHD’s price history covers every major fall and recovery since 2011.

How Far SCHD Fell

SCHD’s share price peaked on 23 January 2020, before the pandemic sell-off began in earnest. By 23 March, the low point for most U.S. stock markets, it had fallen by around 33%, according to market data providers.

That fall happened in about two months. Most of it came in a few weeks of March 2020, when stock markets around the world fell faster than at almost any time in history.

On a quarterly basis, the fall looks smaller. SCHD’s net asset value fell 21.55% between 31 December 2019 and 31 March 2020, because the fund had already started to recover from its low by the end of March.

How SCHD Compared With the S&P 500

SCHD did not hold up better than the broad market in the crash itself. The S&P 500 also fell by around a third from its February peak to the March low. Vanguard’s S&P 500 ETF, VOO, lost 19.63% in the first quarter of 2020, according to its SEC filings, less than SCHD’s 21.55%.

S&P Dow Jones Indices’ own figures for SCHD’s index tell a similar story. From January to March 2020, the Dow Jones U.S. Dividend 100 Index fell 20.09% on a monthly total return basis, against 20.84% for the broad U.S. market, a difference of less than one percentage point.

That is different from earlier crashes. S&P Dow Jones Indices’ back-tested figures show the index rising 17.12% during the 2000 to 2002 technology crash, when the broad market fell 44.33%, and falling 44.47% in the financial crisis against 50.84% for the market.

What Every SCHD Investor Needs to Know

Many investors buy SCHD expecting it to protect them in a crash because it holds established dividend payers. In 2020, it fell as far as the market and further than the S&P 500 in the first quarter.

Do you know how SCHD performed during its worst market declines, how long recovery took and what happened to its dividends? How to Invest in SCHD is a 21-chapter course built from Schwab’s SEC filings, historical holdings data and S&P Dow Jones Indices’ published methodology, covering SCHD’s holdings history, every reconstitution, its performance and dividends and the mistakes investors make, with study guides, practice questions and an assessment in each chapter. FRC’s three progressive ETF programmes take your knowledge further, from ETF Investing for Beginners, through ETF Investing Strategies, to Advanced ETF Investing.

FRC’s programmes and memberships are open to everyone, whether you are investing $500 or $500,000, and you can get started for less than the cost of a few shares. The question isn’t whether financial education costs money. It’s what a lack of it could cost you.

Why SCHD Fell So Hard

The pandemic hit some of the industries SCHD held most heavily. Restaurants, retailers and energy companies were among the hardest hit, as lockdowns closed shops and restaurants and oil prices collapsed.

SCHD’s index rules also played a part. Its yield screen tends to favour companies with higher dividend yields, which are often in more economically sensitive industries, while the fastest-growing technology companies that recovered quickly in 2020 are mostly excluded.

The fund also had no cushion from bonds or cash. SCHD is a fully invested stock fund, so when the whole stock market falls sharply, it falls too, whatever the quality of its companies.

Five Companies Removed for Suspending Dividends

SCHD’s index removes companies between annual reviews if they skip a scheduled dividend or announce that they will stop paying dividends. In the spring of 2020, that rule removed five companies.

Comparing Schwab’s holdings lists from the end of February and the end of May 2020, Darden Restaurants, Macy’s, Nordstrom, Gap and Cracker Barrel were all removed after suspending their dividends. AVX, an electronics company, also left after being taken over.

The index does not replace companies removed between reviews, so the fund held fewer than 100 companies for a time. That is how the rule is designed to work: it removes companies that have stopped paying, rather than continuing to hold them until the next annual review.

Some summaries say these companies were removed for breaking SCHD’s ten-year dividend requirement. That is not the rule that applied: the ten-year test is checked only at the annual review, and the removals came from the separate rule for skipped or stopped dividends, which S&P Dow Jones Indices has applied in monthly reviews since July 2018.

Put another way, five of SCHD’s roughly 100 companies stopped paying. Around 95% of the fund’s companies kept paying their dividends through the worst of the crash.

What Happened to SCHD’s Dividend

The most striking part of SCHD’s 2020 record is its dividend. Despite the crash and the removals, the fund paid more in 2020 than in 2019.

The March 2020 payment, made at the end of the month just days after markets hit their lows, was $0.4419 a share, before adjusting for the 2024 three-for-one split, compared with $0.3520 in March 2019. The June payment was $0.4420, the September payment $0.5430 and the December payment $0.6015, the largest the fund had paid at the time.

In total, SCHD paid around 17.6% more in 2020 than in 2019, based on Schwab’s distribution history. FRC’s guide to SCHD’s dividend growth shows how 2020 fits into the fund’s record of rising every calendar year from 2012 to 2025.

Why the Dividend Held Up

The answer lies in the rest of SCHD’s holdings. Most of its companies kept paying, and many continued to raise their dividends, because SCHD’s four-factor score favours companies with strong cash flow relative to debt and high returns on equity.

The companies that suspended their dividends were relatively small parts of the fund. Their loss was more than offset by the dividends paid by the larger, financially stronger companies that made up most of SCHD’s portfolio.

This is the part of SCHD’s design that worked as intended in 2020. The quality screens did not protect the share price, but they helped protect the income. FRC’s guide to how SCHD chooses its stocks explains the four measures behind that result.

How Long the Recovery Took

SCHD’s recovery took months, not years. Including reinvested dividends, the fund was back to its January 2020 high by early September 2020, according to market data providers, a little over five months after the low.

On share price alone, without dividends, the recovery took until early November 2020, around ten months after the January peak. The difference shows how much of SCHD’s return comes from its dividends.

The S&P 500 recovered faster, returning to its February 2020 high in August 2020. Technology companies, which make up a large part of the S&P 500 but very little of SCHD, led that recovery.

SCHD’s Best Quarter Followed Its Worst

By the end of September 2020, SCHD was still down 1.70% for the year. Then came its best quarter on record: a gain of 17.11% in the last three months of 2020, as vaccine news lifted the economically sensitive companies that had fallen furthest.

That left SCHD up 15.11% for 2020 as a whole, based on net asset value. The S&P 500 finished the year up 18.40%, so SCHD trailed the broader market by around 3.3 percentage points.

The recovery continued into 2021. SCHD returned 29.78% in 2021, slightly ahead of the S&P 500’s 28.71%, and its best three-month period on Schwab’s fund page, a gain of 18.01%, ran from 31 January to 30 April 2021.

If you’re putting your hard-earned money into SCHD without understanding how it works, you’re taking unnecessary financial risks. How to Invest in SCHD takes you inside the fund, its holdings, dividend strategy, performance and risks.

The 2020 Reconstitution

The crash also changed SCHD’s annual review. The reconstitution normally takes effect in March, but in 2020 it was carried out later in the year, and Schwab’s holdings lists show the changes between the end of May and the end of August 2020.

It was one of the largest reshuffles in SCHD’s history. Comparing those lists, the index added 37 companies and removed 30, more than in any other year, including 2026.

Banks were the biggest addition. U.S. Bancorp, M&T Bank, Regions Financial, Zions, Synovus and many smaller regional banks joined, while Procter & Gamble, Home Depot, Intel, Lockheed Martin, Target and General Mills were among the companies removed.

The Rule Changes of 2020

S&P Dow Jones Indices also changed the index’s weighting rules in 2020. After a consultation opened in May, it announced on 29 May that the cap on any single company would be cut from 4.5% to 4%, effective from 22 June 2020.

At the same time, the 25% sector cap switched to the GICS sector classification, and a new daily check was added. If the companies weighted above 4.7% together make up more than 22% of the index, it is reweighted early.

These rules still apply today. FRC’s guide to SCHD’s holdings history covers the 2020 changes alongside every other reconstitution since 2011.

What a $10,000 Investment Went Through

The figures are easier to grasp in money. An investor who put $10,000 into SCHD at the end of 2019 would have seen it fall to around $7,850 by 31 March 2020, based on the fund’s 21.55% first-quarter loss, and to less than that at the lowest point in March.

By the end of the year, the same investment would have been worth around $11,500, including reinvested dividends, based on SCHD’s 15.11% return for 2020. Along the way, it would have received around $350 in dividends, based on the fund’s year-end 2019 share price of around $57.90 and its 2020 payments of $2.0284 a share before the split.

That is the experience SCHD investors actually had in 2020: a sharp fall, a full recovery within the year and a rising stream of income throughout. The figures are illustrative and ignore taxes and the timing of each dividend, but they show why holding on counted for more than anything else that year.

What Investors Can Learn From 2020

The first lesson is that SCHD is not a shelter from crashes. It fell by around a third in 2020 and did worse than the S&P 500 in the first quarter, so investors who expected dividend stocks to be safe were disappointed.

The second is that the income held up far better than the price. The fund’s dividend rose by around 17.6% in a year when its share price fell sharply, which is a very different experience for an investor living off income than for one watching the share price.

The third is that selling at the low was the costliest mistake. Investors who sold in March 2020 locked in a loss of around a third, while those who held on were back to their previous high within months and received a rising dividend throughout.

Planning to live off dividend income? Don’t build your strategy around a dividend yield alone. How to Invest in SCHD examines dividend history, reinvestment, portfolio construction, taxation and income strategies.

How 2020 Compares With SCHD’s Other Falls

The 2020 fall was SCHD’s deepest by far. Its next-largest falls in share price, according to market data providers, were around 19% in 2018 and in 2022, around 18% from late 2024 to April 2025 and around 15% in 2015 and 2016.

Its worst quarter outside 2020 was the last quarter of 2018, when it fell 10.59%. The 2020 first-quarter fall of 21.55% was more than twice as large.

SCHD’s worst calendar year remains 2018, when it returned −5.46%, and it has had only three losing years since 2012: 2015, 2018 and 2022. Despite its deep fall, 2020 was not one of them.

In 2022, SCHD’s pattern was very different. It returned −3.23% for the year, far better than the S&P 500’s −18.11%, because rising interest rates hurt fast-growing technology companies much more than SCHD’s holdings. Its dividend also grew in both bear markets, rising around 17.6% in 2020 and around 13.9% in 2022. FRC’s guide to what happens to your ETF during a stock market crash explains why different funds behave differently in each downturn.

Common Mistakes About SCHD and the 2020 Crash

Assuming SCHD did not fall much. Its share price fell by around a third from its January high to the March low.

Believing SCHD outperformed the S&P 500 in 2020. It fell further than VOO, Vanguard’s S&P 500 ETF, in the first quarter and finished the year around 3.3 percentage points behind the index.

Assuming the dividend was cut. SCHD paid more in 2020 than in 2019, even though five companies were removed for suspending their dividends.

Using the quarterly figure as the full fall. The 21.55% quarterly loss understates the peak-to-trough fall, because the fund had already recovered part of the way by 31 March.

Common Questions

How much did SCHD fall in 2020? Its share price fell by around 33% from 23 January to 23 March 2020, according to market data providers. Its net asset value fell 21.55% in the first quarter of 2020, its worst quarter on record.

Did SCHD cut its dividend in 2020? No. SCHD paid around 17.6% more in 2020 than in 2019, and its March 2020 payment was higher than its March 2019 payment.

How long did SCHD take to recover from the 2020 crash? Including reinvested dividends, a little over five months from the March low, by early September 2020. On share price alone, it recovered by early November 2020.

Did SCHD do better than the S&P 500 in 2020? No. SCHD returned 15.11% in 2020, against 18.40% for the S&P 500, and fell 21.55% in the first quarter, against 19.63% for VOO, Vanguard’s S&P 500 ETF.

What was SCHD’s best quarter? The fourth quarter of 2020, when it gained 17.11%, in the same year as its worst quarter.

Which companies did SCHD remove during the pandemic? Darden Restaurants, Macy’s, Nordstrom, Gap and Cracker Barrel were removed after suspending their dividends, and AVX left after a takeover.

Did SCHD’s dividend grow in other bear markets? Yes. SCHD’s annual dividend rose around 13.9% in 2022, when the S&P 500 fell 18.11%, as well as around 17.6% in 2020.

Were the companies removed for breaking the ten-year dividend rule? No. They were removed under the separate rule for companies that skip or stop their dividends, which applies between annual reviews.

Did Macy’s ever return to SCHD? Yes. Macy’s was added back at the 2026 reconstitution.

What changed in SCHD’s 2020 reconstitution? It was carried out later than usual and added 37 companies while removing 30, including a large move into banks.

Was SCHD up or down in 2020? Up. Despite the crash, SCHD’s net asset value return for 2020 was 15.11%, helped by its best quarter on record at the end of the year.

Is SCHD safe in a stock market crash? No stock fund is safe from a crash. SCHD’s dividend held up well in 2020, but its share price fell by around a third.

Your Portfolio Deserves an Educated Investor

The 2020 crash gave SCHD both its worst quarter and its best. Its share price fell by around a third, but its dividend rose by around 17.6%, and investors who held on were back to their previous high within months.

Before buying another few shares of SCHD, consider investing in understanding the fund itself. How to Invest in SCHD examines its selection methodology, historical performance, dividend taxation and investment strategies, while FRC’s three progressive ETF programmes take you from how ETFs work to managing risk across everything you own. FRC’s programmes and memberships are open to everyone, whether you are investing $500 or $500,000.

A poor investment decision could cost you thousands, and selling in a crash is one of the most common. Know how SCHD behaves when markets fall before the next crash tests you.