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Schwab U.S. Dividend Equity ETF: Bearish Outlook Despite Positive News Sentiment

StockInvest.us, 1 month ago

StockInvest.us Introduction and Overview

The Schwab U.S. Dividend Equity ETF (SCHD) is traded on the AMEX exchange. As of October 27, 2023, it closed at $66.90, with a change of -1.88% or -$1.28. The ETF has experienced a price low of $66.67 and a high of $79.49 within the year. Despite the reasonably wide price range, the ETF's volume is high, with an average value of around 2.96 million and a specific volume of 5.20 million on October 27, 2023.

Given the market sentiment reflected in news reports, investors are optimistic about the growing appeal of dividend-paying companies/ ETFs and the opportunities that current market conditions might pose, especially for high-quality dividend stocks.

Fundamental Analysis

SCHD has a PE ratio of 12.84 and an EPS of 5.27. Although the company does not list a market cap or shares outstanding, the P/E ratio indicates that for every dollar investors put into SCHD, they receive $12.84 in value. This ratio is relatively significant as it suggests the ETF's growth potential.

Furthermore, the dividend yield is a crucial factor, given that the primary attraction of this ETF is its dividend payout. Given the current price, it indicates potential monthly income for the investor that can contribute towards covering monthly expenses.

Technical Analysis

The current price is significantly below both the 50-Day Moving Average (71.74) and the 200-Day Moving Average (72.95). It reflects a bearish sentiment related to the ETF. However, with an RSI of 27, the ETF seems to be in the oversold territory, potentially flagging an imminent price reversal.

SCHWAB U.S. DIVIDEND EQUITY ETF SCHWAB U.S. DIVIDEND EQUITY ETF The 3-month MACD stands at -0.55, further reinforcing the bearish trend. However, this needs to be viewed in conjunction with the RSI to understand if a trend reversal is to be expected. Unlike other stocks, SCHD does not have specified support levels, but it does have a resistance at $71.43, which represents a significant level that must be overcome for the ETF to exhibit an upward trend.

News Sentiment Analysis

News centered on SCHD and related ETFs is primarily positive, with recurrent themes of dividend growth, investing in a bear market, and creating passive income. The ETF's value is discussed within the broader context of investing in dividend-paying stocks, noting the appealing yields and potential for dividend growth.

Predictions and Final Evaluation

Given the ETF's current oversold position, the ETF may witness a slight rebound in the next trading day (October 30, 2023). Within the week, the ETF might challenge the resistance level of $71.43.

However, given the bearish technical markers, unless the RSI continues to trend upwards and there's a positive crossover of the MACD, the ETF maintains a bearish outlook.

Moreover, the recent negative price change of over 1% compares unfavorably to the positive news sentiment indicative of a disconnect between the market perception and technical indicators - a situation which would require close monitoring in the future.

Overall, given the bearish technical indicators and the ETF's dividend appeal, this would be a Hold at this time. Investors might want to hold off new purchases until there are stronger signs of a bullish trend, but those who already hold the stock can take advantage of the dividends while waiting for any potential price increases. Additionally, given the prevailing market condition, the ETF could provide higher yields when prices rise.

Check full SCHWAB U.S. DIVIDEND EQUITY ETF SCHWAB U.S. DIVIDEND EQUITY ETF forecast and analysis here.