SCHD’s Rebalancing Calendar, Step by Step

SCHD changes its holdings on a fixed calendar. Once a year, in March, every company is scored again and companies are added and removed. Every quarter, in March, June, September and December, the weights are reset so that no company or sector grows too large.

There are also two smaller checks that run between those dates. A daily check stops the largest holdings from dominating the fund, and a monthly review removes any company that skips or stops its dividend. Together, these four events decide what SCHD owns at any moment.

Most investors never look at this calendar, yet it explains why SCHD’s holdings, sectors and dividend shift from year to year. FRC’s How to Invest in SCHD course is built from Schwab’s own SEC filings and S&P Dow Jones Indices’ published methodology, and covers every reconstitution in SCHD’s history and what each one changed. 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. It sets out each rebalancing event in turn, what happens on each date and what it means for investors who hold the fund.

The Short Answer: SCHD’s Rebalancing Calendar

SCHD tracks the Dow Jones U.S. Dividend 100 Index, run by S&P Dow Jones Indices. The fund does not decide when to rebalance; it follows the index, and the index follows a published timetable.

The main event is the annual reconstitution. It takes effect after the close of trading on the third Friday of March, so the new holdings are in place when the market opens on the following Monday. In 2026, that meant changes after the close on Friday 20 March, with the new index live from Monday 23 March. When people give the reconstitution date as the third Friday of March, this is what they mean: the trades happen at that day’s close, and investors own the new portfolio from the next trading day.

The second event is the quarterly reweighting. It takes effect after the close on the third Friday of June, September and December, and the March reconstitution does the same job in March. At each of these dates, the weights are reset to the index’s caps of 4% per company and 25% per sector.

The other two events have no fixed date. A daily check can force an early reweighting if the largest holdings grow too big, and a monthly dividend review can remove a company that skips or stops its dividend. Schwab’s prospectus sums up the pattern in one line: the index composition is reviewed annually and rebalanced quarterly.

The Annual Reconstitution in March

The reconstitution is the only time new companies enter SCHD’s index. Every eligible U.S. company is screened and scored again from the beginning, and the top 100 become the index for the next twelve months.

The screens are the same each year. A company needs at least ten consecutive years of dividends, a float-adjusted market value of at least $500 million and average daily trading of at least $2 million. Only the top half by dividend yield go forward, and those are ranked on four equal factors: cash flow to total debt, return on equity, dividend yield and five-year dividend growth. FRC’s guide to how SCHD chooses its stocks explains each step.

Existing holdings get some protection. A company already in the index stays as long as it ranks within the top 200, and new companies then fill the remaining places in rank order until the index reaches 100. This buffer is why the index does not replace half its holdings every year, even though rankings move a great deal.

The changes can still be large. According to Schwab’s SEC filings, the 2026 reconstitution brought in 25 companies and removed 23, including Qualcomm, UnitedHealth Group, Procter & Gamble and Abbott Laboratories as additions and Cisco and AbbVie as removals. FRC’s guide to SCHD’s 2026 reconstitution sets out every change.

Published counts for the same review often differ. Press reports of the 2026 reconstitution gave 22 removals, while Schwab’s holdings lists show 23 companies leaving between the end of February and the end of May, and a difference like that can come from companies leaving for other reasons, such as takeovers, in the same window. Share-class switches and company name changes can also make a holding look like a removal and an addition when nothing has really changed.

What Happens Before March: The Data Dates

The reconstitution takes effect in March, but the data behind it is fixed weeks earlier. Understanding these dates explains why a company that looks strong in March can still be removed.

Dividend history and company fundamentals are measured as of the last business day of December. That covers the ten-year dividend record and the financial measures used in the score, such as cash flow to debt and return on equity, using only the data available on that date.

Market value, trading volume, dividend yield and share price are measured on the third Friday of February. In 2026, that was Friday 20 February, four weeks before the changes took effect.

The gap between the measurement dates and the effective date means the index is always working from a snapshot. A share price that jumps or falls after the February data date has no effect on that year’s selection, and has to wait for the following year’s review.

What Every SCHD Investor Needs to Know

Most investors who hold SCHD could not tell you when its holdings change or why. Anyone can tell you SCHD’s dividend yield, but do you understand how its index selects companies, why holdings are removed and what drives its dividend payments?

We’ve gone beyond internet opinions and recycled investment summaries. 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, which explains how index funds track and rebalance, 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.

Quarterly Reweighting in June, September and December

Between reconstitutions, the list of companies stays the same, but their weights do not. A company whose share price rises grows as a share of the fund, and one whose price falls shrinks.

The quarterly reweighting resets those weights. After the close on the third Friday of June, September and December, each company is weighted again by its float-adjusted market value, then capped at 4% per company and 25% per sector, with any excess shared among the uncapped companies.

This is sometimes described as trimming the winners and topping up the laggards, but that is only partly true. SCHD is weighted by market value, so a company that rises stays larger than one that falls; the reweighting only cuts back the companies that have grown beyond the caps, and passes their excess weight to the rest.

The caps only apply on the reweighting dates, so weights can drift well above them in between. According to Schwab’s SEC filing for the end of May 2026, Qualcomm made up around 6.7% of the fund, well above the 4% cap that applies on each reweighting date. That shows how far a single company’s weight can move in the weeks between reweightings.

The single-company cap has changed once. It was 4.5% from the index’s launch until June 2020, when S&P Dow Jones Indices cut it to 4% and switched the sector cap to the standard GICS sector definitions, with effect from 22 June 2020.

The Daily Cap Check

The quarterly timetable leaves one risk: a few large holdings could grow so big between reweightings that the fund becomes concentrated. A daily check, added in June 2020, guards against that.

Each day, the index adds up the weights of every company above 4.7%. If those companies together make up more than 22% of the index, an early reweighting is triggered, effective two days after the breach, using the same method as the quarterly reweighting.

The check is suspended around each quarterly date. It is frozen from the close on the Wednesday before the second Friday of March, June, September and December until the close on the Monday after the third Friday, so that it does not clash with the scheduled reweighting.

In practice, this is a backstop rather than a regular event. It would take several companies each well above 4.7% to trip it, and SCHD’s broad spread across around 100 companies makes that unusual.

Monthly Dividend Reviews

SCHD’s index also checks its companies’ dividends every month. Under the rule S&P Dow Jones Indices applies to this index, a company is removed if it omits a scheduled dividend payment or announces that it will stop paying dividends for an undetermined period.

The review uses company announcements made up to and including the 21st of each month, or the 18th in February. Removals take effect before the open on the first business day of the following month, and are announced five business days in advance.

A dividend cut on its own does not trigger removal. A company that reduces its dividend but keeps paying stays in the index until the next March reconstitution, when its lower yield and weaker dividend growth are scored with everything else. FRC’s guide to whether SCHD removes companies that cut dividends covers the companies this rule has affected.

The clearest example came in 2020. According to Schwab’s SEC filings, Darden Restaurants, Macy’s, Nordstrom, Gap and Cracker Barrel all left SCHD between February and May 2020 after suspending their dividends during the pandemic.

Takeovers, Spin-offs and Gaps Between Reviews

Companies also leave SCHD when they are taken over. When a holding is acquired, it is removed from the index, as AVX was after Kyocera’s takeover in 2020 and Staples was after it was taken private in 2017.

Removed companies are not replaced until the next March reconstitution. That means the index can hold fewer than 100 companies for part of the year. In 2020, the dividend suspensions and the AVX takeover left SCHD with 93 holdings at the end of May, according to Schwab’s SEC filings.

Spin-offs are handled differently. When a holding spins off part of its business, the new company is added to the index at a zero price just before the spin-off and removed after at least one day of trading.

These mechanics explain why SCHD’s holdings count is not always exactly 100. Schwab’s fund page showed 102 holdings on 5 November 2026, and the number moves above and below 100 as these events occur.

The 2020 Exception

The calendar has been broken once. In 2020, as markets fell and trading conditions were extreme, SCHD’s annual reconstitution did not happen in March.

Schwab’s SEC filings show no reconstitution changes between the end of February and the end of May 2020, other than the dividend removals and the AVX takeover. The reconstitution changes appear between the end of May and the end of August 2020, so it was carried out later in the year.

When it came, it was the largest in SCHD’s history by count. The filings show 37 companies added and 30 removed, with a large move into banks. FRC’s guide to how SCHD did in the 2020 crash covers that year in full.

The exception shows that the timetable is a rule, not a guarantee. S&P Dow Jones Indices can change the timing when market conditions require it, and investors who watch for March changes should check that the review has gone ahead as planned.

What Online Summaries Get Wrong About SCHD’s Rebalancing

Many summaries of SCHD’s rebalancing, including some AI-generated answers, repeat rules that are out of date or were never correct. The most common error is the single-company cap, often given as 4.5%. That was the cap until June 2020; it has been 4% since then.

Another frequent error is the claim that a company is removed for cutting its dividend. Under the monthly review, only a skipped payment or a stopped dividend leads to removal between reviews. A cut, however large, is dealt with at the next March reconstitution through the scoring rules.

The daily check is also often described loosely, as if any single stock or sector above its cap triggers action. The actual test is narrower: it only applies when the companies weighted above 4.7% together exceed 22% of the index, and it is switched off around each quarterly date.

Finally, some summaries describe the reconstitution as rebuilding the fund entirely from scratch. Every company is scored again, but the buffer rule keeps existing holdings that still rank in the top 200, which is why most of the fund carries over from one year to the next.

How Much Changes Each Year

The size of each reconstitution varies widely. S&P Dow Jones Indices has reported that average one-way turnover at the annual rebalance was 21.4% between January 2011 and June 2023, meaning around a fifth of the index’s value changed hands each year on average.

The fund’s own turnover figures tell a similar story. Schwab reported portfolio turnover of 17% for its first fiscal year to August 2012, 46% for the year to August 2021, 28% for the year to August 2023 and 30% for the year to August 2025. Its fund page showed turnover of 40.61% as of 30 September 2026, which includes the large 2026 review.

Counted by company, the 2018 reconstitution added and removed 23 each, setting aside Walmart’s change of name, and removed Coca-Cola, Microsoft, Johnson & Johnson, McDonald’s and Boeing, which together made up around a fifth of the fund. FRC’s guides to why SCHD removed Microsoft and why SCHD removed Coca-Cola explain those changes.

Some companies have survived every review. FRC’s guide to SCHD’s longest-held stocks looks at the handful that have been in the fund since its first filings.

If SCHD is part of your investment plans, make understanding it part of your plans too. How to Invest in SCHD explores its holdings, dividend methodology, performance, taxation and risks in one structured course.

What Rebalancing Means for SCHD’s Dividend

Each reconstitution changes the companies that pay SCHD’s dividend. When high-yielding companies leave and lower-yielding companies with faster dividend growth join, the fund’s income can dip in the short term even though the long-term growth profile improves.

The 2026 review shows this effect. It moved money out of energy and into health care and technology, with Qualcomm, UnitedHealth and Accenture among the additions. SCHD’s June 2026 payment was around 3% lower than a year earlier, although its first three payments of 2026 were around 0.8% higher in total than in 2025.

Rebalancing and dividend payments run on separate schedules. SCHD’s ex-dividend dates fall in March, June, September and December, often within days of a reweighting, but the two are independent events. FRC’s guide to SCHD’s dividend sets out when each payment is made.

Rebalancing has also not produced capital gains distributions for investors in recent years. Schwab’s distribution history shows all 40 payments from December 2016 to September 2026 as income only, with no capital gains, so investors have not received a separate taxable gain because of the fund’s annual turnover.

Do You Need to Do Anything When SCHD Rebalances?

No. The fund carries out all of the buying and selling itself, and an investor’s number of SCHD shares does not change. What changes is the mix of companies behind each share.

Some investors watch the reconstitution closely because it changes the fund’s sectors, yield and growth profile. Others ignore it entirely, on the basis that the rules are doing the job they were designed for.

Trying to trade around the rebalance is a different question. The rules and dates are published, the changes are widely reported and the market prices them in, so there is no reliable edge from buying or selling SCHD around a reconstitution.

What investors can do is understand what changed and why. A reconstitution that removes a favourite company or reduces the yield is the rules working as intended, and the mistake many investors make is to react to it without knowing that. FRC’s guide to SCHD mistakes to avoid covers the most common errors.

A poor investment decision could cost you thousands. How to Invest in SCHD examines the mistakes investors make with dividend ETFs, including chasing yield, overlooking taxation and selling during downturns.

Rebalancing the Fund vs Rebalancing Your Own Portfolio

A common search is how often investors should rebalance SCHD. The fund’s own rebalancing and an investor’s rebalancing are two separate things. The index takes care of what SCHD holds; what it does not do is manage how much of your portfolio sits in SCHD compared with your other investments.

Investors who rebalance their own portfolios tend to use one of two approaches. Some rebalance on a calendar, once or twice a year, back to their target mix. Others rebalance only when a holding drifts a set amount away from its target, such as five percentage points.

Both approaches involve selling something, and in a taxable account that can create a capital gains bill. Directing new contributions or reinvested dividends towards the underweight holding is one way investors reduce how often they need to sell. FRC’s guide to how SCHD dividends are taxed explains the tax side.

Which approach suits a particular investor depends on their account type, tax position and goals, and there is no single schedule that is right for everyone.

Key Dates for the Next Year

Based on the published rules, the next quarterly reweighting takes effect after the close on Friday 18 December 2026. The data for the 2027 reconstitution will be measured on Friday 19 February 2027, using dividend and fundamental data as of the last business day of December 2026.

The 2027 reconstitution is due to take effect after the close on Friday 19 March 2027, with the new index in place from the open on Monday 22 March 2027. The quarterly reweightings would then follow after the close on Friday 18 June, Friday 17 September and Friday 17 December 2027.

The monthly dividend review continues throughout, with any removals taking effect on the first business day of each month. These dates follow from the methodology, and S&P Dow Jones Indices can change them, as it did in 2020.

FRC’s guide to SCHD’s holdings history shows how each past reconstitution has reshaped the fund, which is the best guide to what the next one might change.

Common Questions

When does SCHD rebalance? SCHD’s index is reconstituted once a year, with changes taking effect after the close on the third Friday of March. Its weights are reset quarterly, after the close on the third Friday of June, September and December.

What is the difference between reconstitution and rebalancing? Reconstitution changes which companies are in the index, and happens once a year in March. Rebalancing, or reweighting, resets the weights of the existing companies, and happens every quarter.

When is SCHD’s next reconstitution? Based on the published rules, the 2027 reconstitution is due to take effect after the close on Friday 19 March 2027, with the new holdings in place from Monday 22 March 2027.

What is the SCHD reconstitution date? The reconstitution takes effect after the close on the third Friday of March each year. In 2026 that was Friday 20 March, and in 2027 it is due to be Friday 19 March.

Is SCHD’s single-stock cap 4% or 4.5%? It is 4%. The cap was 4.5% until June 2020, when S&P Dow Jones Indices reduced it, and many older summaries still quote the earlier figure.

How often does SCHD change its holdings? New companies are only added once a year, at the March reconstitution. Companies can be removed at other times if they skip or stop their dividend, or if they are taken over.

Does SCHD rebalance quarterly? Yes. The weights of its companies are reset to the 4% company cap and 25% sector cap every quarter, and an extra reweighting can be triggered between quarters if the largest holdings grow too big.

Why does SCHD hold more or fewer than 100 stocks? Companies removed during the year are not replaced until the next reconstitution, and spin-offs are held briefly before being removed. Schwab’s fund page showed 102 holdings on 5 November 2026.

Does SCHD remove a company that cuts its dividend straight away? No. Only a skipped payment or a stopped dividend triggers removal between reviews. A company that cuts but keeps paying is assessed at the next March reconstitution.

Is the reconstitution date announced in advance? The timing follows S&P Dow Jones Indices’ published methodology, so the dates can be worked out in advance. The changes themselves are usually reported shortly before they take effect.

Does rebalancing create a tax bill for SCHD investors? Schwab’s distribution history shows no capital gains distributions from December 2016 to September 2026, so rebalancing has not produced a separate capital gains payment for investors in that period.

Did SCHD rebalance in March 2020? Not in the usual way. Schwab’s SEC filings show the 2020 reconstitution changes taking place between the end of May and the end of August 2020, later than normal, during the market turmoil caused by the pandemic.

Should I buy SCHD before or after the reconstitution? The rules and dates are public and the changes are priced in by the market, so there is no reliable advantage in timing a purchase around the reconstitution.

How often should you rebalance a portfolio that holds SCHD? The fund rebalances itself, so the question is how often to reset your own mix of investments. Some investors do this once or twice a year and others only when a holding drifts a set amount from its target; the right approach depends on your accounts, taxes and goals.

Your Portfolio Deserves an Educated Investor

SCHD’s holdings are not fixed. They are rebuilt every March, reweighted every quarter and checked every month, and each of those events can change the companies, sectors and dividends behind your shares.

Before buying another few shares of SCHD, consider investing in understanding the fund itself. How to Invest in SCHD takes you through its selection methodology, every reconstitution, its historical performance, dividend taxation and investment strategies, while FRC’s three progressive ETF programmes take you from how index funds work, through building a strategy, to managing risk across a whole portfolio. FRC’s programmes and memberships are open to everyone, whether you are investing $500 or $500,000.

Your money is already working in the market. Now make sure your knowledge is working just as hard.