The Review That Removed Five Household Names
SCHD removed Coca-Cola at its 2018 reconstitution, along with Johnson & Johnson, McDonald’s, Boeing and Microsoft. According to the holdings lists in Schwab’s SEC filings, those five companies alone made up around 20% of the fund at the end of May 2017, and all five were gone by the end of May 2018.
Coca-Cola was SCHD’s largest holding at the time, at around 4.8%. It returned to the fund a year later and remains one of its largest holdings today, but Johnson & Johnson, McDonald’s, Boeing and Microsoft have not been back.
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 covers every SCHD reconstitution since 2012, including the 2018 review. 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 holdings history covers every company added and removed since 2011.
How Big These Companies Were in SCHD
At the end of May 2017, Coca-Cola was SCHD’s largest holding at around 4.8%, just ahead of Microsoft at around 4.8%. Johnson & Johnson was fourth at around 4.6%, McDonald’s made up around 3.4% and Boeing around 2.9%, based on the values in Schwab’s filing.
Together, those five companies accounted for around 20% of the fund. Coca-Cola, Microsoft and Johnson & Johnson were three of SCHD’s four largest holdings.
Several of them had been in the fund from the start. At the end of February 2012, Coca-Cola made up around 4.4% of SCHD, Johnson & Johnson around 4.3% and McDonald’s around 3.6%, and all three were among its ten largest holdings at launch.
How Much of SCHD Changed in 2018
The 2018 review was one of the largest in SCHD’s history. Comparing Schwab’s holdings lists from the end of May 2017 and the end of May 2018, the index added 23 companies and removed 23, once Walmart’s change of name from Wal-Mart Stores is set aside.
Not every departure was a decision by the index. Reynolds American, Dow Chemical and Staples left after takeovers or mergers, leaving 20 companies removed under the index’s rules.
The companies removed under the rules made up around a quarter of SCHD’s value at the end of May 2017. Few reviews before or since have removed so much of the fund’s largest holdings at once.
What Every SCHD Investor Needs to Know
Investors who bought SCHD in 2017 for Coca-Cola, Johnson & Johnson and McDonald’s found, a year later, that none of them was in the fund. 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, 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 Were They Removed?
Neither Schwab nor S&P Dow Jones Indices publishes a reason for each removal. What the index rules do make clear is how a company can fall out.
Every March, eligible companies are first screened for ten years of dividends, size and trading, and only the top half by dividend yield go forward. The rest are ranked on four measures: cash flow to total debt, return on equity, dividend yield and five-year dividend growth.
An existing member is kept as long as it ranks in the top 200 on that combined score. A company leaves if its yield falls into the lower half of eligible stocks, or if its combined score drops outside the top 200. FRC’s guide to how SCHD chooses its stocks explains each step.
None of the five was removed for stopping its dividend. All of them were still paying when they left, and none was removed between reviews.
What the Figures Suggest for Each Company
For some of the five, the published figures point to a likely cause. For others, the cause is not clear from public information, and FRC does not guess.
Microsoft is the clearest case. Its share price rose much faster than its dividend, and its yield fell below 2% by early 2018, well below the companies the index was selecting. FRC’s guide to why SCHD removed Microsoft covers its story in full.
Boeing followed a similar pattern. Its share price rose by around 89% during 2017, from around $159 to close to $300, which pushed its dividend yield down even though Boeing raised its quarterly dividend by 20% to $1.71 a share in December 2017.
McDonald’s faced a different issue that may have counted against it. The company has reported negative shareholders’ equity since 2016, after years of borrowing to fund share buybacks, and SCHD’s index rules rank companies with negative book value last on return on equity, one of the four measures.
Negative equity at McDonald’s is not a sign of distress. It reflects the way the company has returned cash to shareholders and the historical cost at which its property is recorded, but under SCHD’s mechanical rules it still counts against the company on that measure.
Coca-Cola and Johnson & Johnson are harder to explain from the outside. Coca-Cola’s dividend yield was still above 3% in 2017, based on the share price in Schwab’s filings and its dividend at the time, so its removal most likely came from its combined score on the four measures rather than from the yield screen.
The Rules Applied to Everyone
The 2018 review shows that SCHD’s index treats every company the same way. Being one of the world’s best-known brands, or the fund’s largest holding, gave Coca-Cola no protection.
The index does not use judgement about a company’s reputation, its future prospects or how investors feel about it. It applies the same screens and scores to every eligible company each year.
That is a strength and a weakness. It removes companies whose numbers have weakened before anyone has to make a difficult decision, but it can also remove companies that go on to do well, or bring them back a year later.
Coca-Cola’s Quick Return
Coca-Cola was back in SCHD by the end of November 2019, according to Schwab’s holdings lists, after just one year out. By the end of February 2020, it made up around 4.9% of the fund.
It has stayed since. At the end of May 2026, Coca-Cola made up around 4.0% of SCHD, and by early November 2026, Schwab’s published list showed it at around 4.2%, among the fund’s three largest holdings.
Its return shows how close some removals are. A company that falls just outside the index’s thresholds one year can easily qualify again the next, as its share price, dividend and finances change.
Why the Others Have Not Returned
Johnson & Johnson and McDonald’s have not appeared in any of SCHD’s holdings lists since 2018. S&P Dow Jones Indices does not publish why companies are not selected, so the reasons cannot be confirmed.
Boeing has a simpler explanation. It suspended its dividend on 20 March 2020, as the pandemic and the grounding of its 737 MAX aircraft put pressure on its finances, ending decades of uninterrupted payments.
That broke the unbroken record of payments the index requires, so Boeing cannot qualify again until it has resumed paying and rebuilt a ten-year record.
Microsoft’s yield has stayed well below the level SCHD’s index selects from. By 2026, it was well below 1%.
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.
Be Careful With Confident Explanations
Many summaries online give a precise reason for each removal, such as rising debt at Boeing or litigation costs at Johnson & Johnson. S&P Dow Jones Indices has not published reasons for individual removals, and those explanations are not confirmed by the index provider.
The safest approach is to separate what the filings show from what commentators infer. The filings confirm which companies left and when; the reasons can only be estimated from the published rules and each company’s figures.
What Replaced Them
The 2018 review added 23 companies. They included Union Pacific, Hershey, Kellogg, Campbell Soup, CVS Health, Cardinal Health, Prudential Financial, KLA-Tencor, Snap-on and Robert Half.
The newcomers were mostly smaller than the companies they replaced. Excluding Walmart, which appears as an addition only because of its change of name, the new companies made up around 13% of the fund at the end of May 2018, against around a quarter for the companies removed under the rules a year earlier.
The largest holdings changed too. At the end of May 2018, Exxon Mobil led at around 5.0%, followed by Intel, Home Depot, Pfizer and Verizon, a very different top five from the year before.
How SCHD Performed After the Review
SCHD’s results in the following years were mixed. The fund returned −5.46% in 2018, its worst calendar year since launch, against −4.38% for the S&P 500, and 27.28% in 2019, against 31.49% for the S&P 500, based on Schwab’s and Vanguard’s filings.
Its income held up better. SCHD’s annual dividend rose around 7.0% in 2018 and around 19.8% in 2019, among the fastest increases in its history, according to Schwab’s distribution history.
No one can say how SCHD would have done if the five companies had stayed. What the record shows is that the fund continued to grow its dividend after losing five of its best-known names. FRC’s guide to SCHD’s price history covers how it performed through those years.
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.
The Pattern Since 2018
The 2018 review was not unique. Famous names have left SCHD at many reviews: Chevron in 2017, Procter & Gamble, Home Depot and Intel in 2020, Exxon Mobil in 2021, IBM in 2023, Broadcom and Merck in 2024, and Cisco and AbbVie in 2026.
Several have returned. Chevron came back in 2023, Home Depot and Merck in 2021 and 2025, and Procter & Gamble in 2026, while Johnson & Johnson and McDonald’s have stayed out.
Only four companies have been in SCHD’s index at every review since 2011: Kimberly-Clark, Paychex, PepsiCo and T. Rowe Price. FRC’s guide to SCHD’s longest-held stocks explains what has kept them there.
Should You Buy These Companies Directly?
Some investors who liked SCHD’s old holdings ask whether they should simply buy Coca-Cola, Johnson & Johnson or McDonald’s themselves. That is a very different investment from owning SCHD.
A handful of individual companies would be far more concentrated than SCHD’s roughly 100, so a problem at any one of them would have a much larger effect. It would also mean giving up the index’s yearly process of replacing companies whose numbers have weakened.
Buying individual stocks also means making the decisions SCHD’s rules make automatically, including when to sell. Investors who choose that route need to judge each company’s dividend, finances and valuation for themselves, rather than relying on the index.
Why Brand Names Do Not Decide SCHD’s Holdings
Many investors are drawn to SCHD by the familiar names in its top ten. The 2018 review is a reminder that those names are a result of the rules, not the reason for them.
A company appears in SCHD because its figures meet the index’s tests in a given year, whether it is a household name or a small regional bank. When the figures change, the holding changes, however well known the company is.
What Investors Can Learn From 2018
The first lesson is that SCHD is not a fixed basket of famous dividend stocks. Its largest holdings in one year can be gone the next.
The second is that a removal says nothing certain about a company’s future. Coca-Cola was removed and returned within a year, while others never came back for reasons that are not published.
The third is that the rules count for more than the names. Investors who understand how SCHD’s index ranks and replaces companies are far less likely to be surprised when a favourite holding disappears. FRC’s guide to whether SCHD removes companies that cut dividends explains the other route by which companies leave.
Common Mistakes About SCHD’s 2018 Removals
Assuming the companies were removed because they cut their dividends. All five were still paying when they left, and none was removed between reviews.
Assuming Coca-Cola has always been in SCHD. It was removed in 2018 and returned in 2019.
Assuming a removal means something is wrong with the business. The index applies mechanical rules, and a company can fall just outside its thresholds in a strong year.
Assuming SCHD still holds its launch-day top ten. Of its ten largest holdings in February 2012, only PepsiCo has never left the fund.
Common Questions
Why did SCHD remove Coca-Cola? Neither Schwab nor S&P Dow Jones Indices publishes reasons for individual removals. Coca-Cola’s yield was still above 3% in 2017, so its removal at the 2018 review most likely came from its combined score on the index’s four measures.
When did SCHD remove Coca-Cola? At the 2018 reconstitution. It appears in Schwab’s holdings list for the end of May 2017 and is absent from the list for the end of May 2018.
Is Coca-Cola in SCHD now? Yes. Coca-Cola returned in 2019 and made up around 4.2% of SCHD in early November 2026, according to Schwab’s published list.
Did SCHD remove Johnson & Johnson? Yes. Johnson & Johnson was removed at the 2018 reconstitution and has not appeared in SCHD’s holdings lists since.
Did SCHD remove McDonald’s? Yes. McDonald’s was removed at the 2018 reconstitution and has not returned.
Why is Boeing not in SCHD? Boeing was removed in 2018 and suspended its dividend in March 2020, so it no longer has the unbroken dividend record SCHD’s index requires.
How much of SCHD did the 2018 removals represent? Coca-Cola, Microsoft, Johnson & Johnson, McDonald’s and Boeing alone made up around 20% of SCHD at the end of May 2017.
How many companies did SCHD change in 2018? Schwab’s holdings lists show 23 additions and 23 removals, including three companies that left because of takeovers or mergers.
Which of SCHD’s original top ten holdings are still in the fund? Of its ten largest holdings at the end of February 2012, only PepsiCo has never left, while Chevron, Procter & Gamble and Coca-Cola left and later returned.
Does SCHD hold Johnson & Johnson? No. Johnson & Johnson has not been in SCHD since the 2018 reconstitution, according to Schwab’s holdings lists.
Is McDonald’s part of SCHD? No. McDonald’s was removed in 2018 and has not returned.
Has SCHD’s dividend decreased recently? SCHD’s June 2026 payment was around 3% lower than in June 2025, but its first three payments of 2026 were around 0.8% higher in total than the same three in 2025.
Did SCHD’s dividend fall after the 2018 removals? No. SCHD’s annual dividend rose around 7.0% in 2018 and around 19.8% in 2019.
Your Portfolio Deserves an Educated Investor
The 2018 review removed Coca-Cola, Johnson & Johnson, McDonald’s, Boeing and Microsoft, around a fifth of SCHD, in a single day. Only Coca-Cola has returned, and the fund’s dividend kept growing without the others.
Before buying another few shares of SCHD, consider investing in understanding the fund itself. How to Invest in SCHD examines its selection methodology, holdings history, 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.
If SCHD is part of your investment plans, make understanding it part of your plans too. Know why famous names leave the fund before your favourite holding is the next to go.
