XOM - SCHD: If You've Won The Game Take A Little Off The Top

2024-04-22 00:41:39 ET

Summary

• SCHD is a great capital gains storage for positions that may be getting over-concentrated in your portfolio.
• Many investors have big winners from buying the dips in 2020 and 2022.
• Chances are your winners have expanded P/E ratios. SCHD is a great way to reduce the overall P/E ratio of your portfolio amongst 100 quality dividend-paying stocks.
• At a 3.53% yield, SCHD has a higher yield than most single shares of blue chip names available, including the energy sector, which is one of the cheapest in the market.

Time for a shave

It has come the time to count one's blessings. Those who have bought and held shares of a lot of demolished blue chip stocks since the fortuitous bottoms in 2020 and 2022 have a lot to be thankful for. Yes, it takes some skill to identify single shares that are both "cheap" and have the prospects of snapping back to their all-time highs with even some extra growth baked into boot. While I preach buy and hold and have almost no turnover per year in my portfolio [I aim for less than 5%], there comes a time when reducing winners does not equate to "picking the flowers and watering the weeds" as Peter Lynch would say.

As I sit on a few of these winners, I have been sorting through and making a few reductions, stuffing the winnings into various index funds. Namely State Street and Vanguard's S&P 500 index funds ( SPLG ) ( VOO ), Invesco's Q's fund ( QQQ ), and of course, Schwab's U.S. Dividend Equity ETF ( SCHD ). Of the lot, SCHD is the cheapest index with a P/E ratio of only 14.5 X:

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