How to invest in SCHD ETF from Europe (SCHD Alternatives)
SCHD (Schwab U.S. Dividend Equity ETF) is a U.S.-domiciled ETF that tracks the Dow Jones U.S. Dividend 100 Index - basically, 100 U.S. stocks with a consistent history of dividend payments. It’s known for:
- Solid dividend growth over time
- Low cost (about 0.06% annual expense ratio)
- Quality-focused selection of dividend-paying companies
It’s become a favorite among dividend investors because of its strong track record and low fees.
Can you invest in SCHD directly from Europe?
For most European retail investors, no, you can’t buy SCHD directly. That’s because ETFs offered to EU retail investors must produce a KID (Key Information Document) to meet local PRIIPs regulation, and SCHD (being U.S.-domiciled) doesn’t provide one. As a result, most European brokerages will simply block it.
SCHD alternatives in Europe - best dividend ETFs
Luckily, there are similar ETFs (UCITS) in Europe that focus on high-quality, dividend-paying companies. While none replicate the exact Dow Jones U.S. Dividend 100 Index, they have strategies close to SCHD’s approach. These are fully compliant with EU regulations and can be bought through regular European brokers.
Here’s a quick rundown of what each ETF offers compared to SCHD:
- Vanguard FTSE All-World High Dividend Yield UCITS (VHYL): Invests in high-dividend stocks from around the world. Unlike SCHD, which is U.S.-focused, VHYL offers global diversification while still emphasizing dividend yield.
- SPDR S&P U.S. Dividend Aristocrats UCITS (USDV): Focuses on U.S. companies that have consistently increased their dividends (Dividend Aristocrats). Both USDV and SCHD target U.S. dividend stocks. The difference is in their selection criteria: SCHD tracks a broader U.S. dividend index, while USDV zeroes in on companies with a long history of raising dividends.
- Fidelity US Quality Income UCITS (FUSD): Invests in U.S. stocks that are considered high quality and generate income. Similar to SCHD’s focus on dividend payers, FUSD emphasizes quality but may include different criteria to select companies based on income and stability.
- iShares MSCI USA Quality Dividend ESG UCITS (QDVD): Selects U.S. dividend stocks with an added focus on ESG (Environmental, Social, and Governance) factors. Like SCHD, QDVD targets dividend-paying U.S. companies, but it differentiates itself by applying an ESG screen, which SCHD does not.
- VanEck Morningstar Dev. Markets Dividend Leaders UCITS (TDIV): Invests in dividend leaders from developed markets globally. TDIV is similar in that it focuses on dividend quality, but it offers broader geographic exposure compared to SCHD’s U.S.-only focus.
Investing in SCHD via CFDs (eToro)
One way around this is to invest through CFDs (Contracts for Difference) on platforms like eToro:
This lets you speculate on the price of SCHD without actually owning the fund. However, there are some important caveats:
- Leverage: CFDs can often be leveraged, amplifying both gains and losses.
- Overnight fees: Long-term CFD positions can rack up extra fees, cutting into potential profits.
- No direct dividends: Depending on the platform, you might not receive the actual dividends as you would if you owned the ETF.
So if your goal is long-term dividend investing, pure CFDs might not be ideal - they’re usually more suited to short-term trading or speculation. But if you just want to get exposure to SCHD’s performance, that’s currently one of the few European retail-friendly ways to do it.
Want to know more about CFDs? Check our article on the differences between ETFs and CFDs.
Conclusion
If you’re a European investor looking for something similar to SCHD, you basically have two routes:
- CFDs on platforms like eToro (but watch out for fees and leverage risk).
- A UCITS dividend ETF that offers a strategy close to SCHD’s, minus the regulatory headache.
For most long-term, dividend-focused portfolios, the second option is generally more straightforward and cost-effective. Good luck, and happy investing!
