SCHD Is Up 20% and Offers Investors a Compelling Yield. But These 3 Dividend Stocks Could Be Even Better Buys Now.

Schwab U.S. Dividend Equity ETF (SCHD) has gained roughly 20% in 2026, outperforming the S&P 500's approximately 13% advance, while offering a 3.0% dividend yield. The article highlights higher-income alternatives: PepsiCo yields 4.5%, while Enterprise Products Partners and Realty Income each yield 5.8%; all have long records of annual dividend or distribution increases. The recommendation is primarily portfolio-income focused, with PepsiCo characterized as temporarily out of favor and Enterprise and Realty Income providing exposure excluded from SCHD's screening universe.

Analysis

The relevant signal is factor dispersion, not incremental income demand: SCHD’s methodology concentrates in mature, high-ROE companies and can become crowded after a quality/dividend-led rally. A direct PEP overweight on top of SCHD increases exposure to defensive staples at precisely the point where organic-volume recovery and input-cost normalization must validate the multiple; absent a clear acceleration in North American beverage and snack volumes over the next two quarters, the yield support may not prevent further relative underperformance.

EPD offers a different return driver than equity dividend screens: contracted midstream cash flows, export-volume growth, and retained-cash-flow-funded projects can support distribution growth without requiring a higher oil price. The second-order constraint is capital structure and investor base: MLP ownership limitations can preserve a valuation discount versus C-corps even if operating execution remains strong. This is a 6-18 month carry-plus-growth thesis, but it is vulnerable to an NGL export slowdown, project-cost inflation, or a material widening in energy-credit spreads.

O is principally a duration and external-financing trade rather than a generic high-yield substitute. If long Treasury yields decline or stabilize over the next 1-3 months, its acquisition spread and equity-issuance economics improve disproportionately; if rates re-accelerate, a high payout ratio leaves less internal capital to offset a higher cost of equity. The contrarian point is that scale alone does not guarantee accretive growth: investors should require evidence that new investments are funded at positive per-share spreads, not simply rising gross asset volume.

Key Decisions for Investors

• Maintain SCHD as broad quality-dividend exposure but do not add solely on recent relative strength; reassess if its next rebalance raises concentration in expensive defensives or if dividend-growth guidance across top holdings decelerates. This is a portfolio-construction decision, not a near-term alpha trade.
• Initiate or add a 6-12 month long EPD position against a short CVX hedge sized at roughly 50% of EPD beta. The pair isolates fee-based infrastructure and NGL/export throughput from upstream commodity sensitivity; exit if EPD’s distribution coverage weakens materially, major projects lose return discipline, or the EPD/CVX valuation spread closes without corresponding cash-flow upgrades.
• Place O on a rate-trigger watch list rather than buying immediately: initiate only after the 10-year Treasury yield declines or stabilizes for several weeks and management demonstrates acquisition cap rates remain above marginal funding costs. Target a 6-12 month re-rating; stop the thesis on renewed long-end yield breakout or persistent negative per-share AFFO growth.
• Avoid doubling PEP exposure through both SCHD and a standalone position until quarterly volume trends and margin guidance show a credible recovery. A standalone long becomes attractive only if earnings revisions bottom while the valuation discount to consumer-staples peers remains intact; falsify on another guidance reduction or sustained share loss in core categories.