The Schwab U.S. Dividend Equity ETF (SCHD) has returned approximately 20% in 2026, outperforming both the S&P 500 and Nasdaq-100. The $95 billion fund focuses on companies with at least 10 consecutive years of dividend payments and screens for quality fundamentals. Its concentration in healthcare and consumer staples has benefited from a market rotation away from expensive AI and software stocks, though the fund's long-term job is delivering growing income from durable businesses rather than outrunning growth indexes.

The Nasdaq fell 2.5% for the week amid concerns about unsustainable AI infrastructure spending, with major tech stocks declining. The Dow remained relatively stable, buoyed by strong earnings from Travelers and UnitedHealth Group. Chip stocks faced particular pressure following Taiwan Semiconductor's increased capex forecast and IBM's profit warning, while Netflix dropped 8.5% despite meeting expectations.

The semiconductor sector continued its fourth consecutive day of losses after Taiwan Semiconductor raised capital expenditure forecasts to $60-64 billion, sparking investor concerns about profitability. Memory chip stocks like SK Hynix and Micron plummeted, dragging down the Nasdaq and S&P 500. The Dow remained relatively stable as healthcare stocks, particularly UnitedHealth and Abbott Laboratories, rallied on strong earnings, offsetting tech sector weakness.

US equity futures declined as semiconductor stocks weakened, with the Nasdaq 100 struggling near the 30K resistance level. Despite softer inflation data supporting growth assets, AI enthusiasm is cooling amid concerns about infrastructure investment returns and supply chain constraints. The Fed remains cautious despite improving inflation data, with focus shifting to retail sales and hawkish Fed speakers.

Greg Abel, Berkshire Hathaway's new CEO, sold the company's entire 5 million+ share position in UnitedHealth Group earlier this year, reversing Warren Buffett's purchase from the previous year. Despite the sale, UnitedHealth has made significant recovery progress through cost management, pricing adjustments, and AI investments. At 23x forward earnings, the stock is reasonably priced and considered a solid long-term healthcare holding, though not an absolute steal.

Despite recent market gains driven by AI stocks, valuations are at historically expensive levels similar to the dot-com bubble. The article recommends a simple strategy: invest in quality stocks and hold them long-term. History shows the S&P 500 has always recovered after crashes, making buy-and-hold the key to investing success.

While UnitedHealth Group operates in the growing healthcare industry and has strong long-term performance, the article advises caution due to slow recent growth (2% revenue growth), ongoing DOJ investigations into Medicare billing practices, claims denial lawsuits, and challenges in its Medicare Advantage program forcing membership reductions. Despite AI investments and attractive valuation metrics, these headwinds make it a less compelling investment opportunity.

UnitedHealth Group rebounded strongly in the first half of 2026, gaining 25% after a difficult 2025 marked by earnings misses and leadership changes. The company has implemented recovery measures including cost management improvements, AI efficiency tools, and reduced prior authorization requirements. With a medical care ratio improving to 83.9% and strong revenue growth, analysts suggest it's not too late to invest despite the recent gains, as the company is still in early recovery stages.

The article recommends three healthcare stocks for long-term buy-and-hold portfolios: Johnson & Johnson, Abbott Laboratories, and UnitedHealth Group. All three are praised for their stable dividends, strong cash flows, economic moats, and ability to weather economic downturns. Johnson & Johnson and Abbott are Dividend Kings with 64 and 54 consecutive years of dividend increases respectively, while UnitedHealth Group benefits from its dual-engine model combining insurance and healthcare delivery.

The article examines three dividend-focused ETFs as wealth-building alternatives to growth stocks. SCHD offers higher yields through value-oriented dividend stocks, VIG combines growth potential with rising dividends, and DGRO provides a balanced hybrid approach. All three can build serious long-term wealth through dividend reinvestment if held patiently.

The Schwab U.S. Dividend Equity ETF (SCHD) is recommended as a long-term holding for passive income, offering a 3.25% dividend yield—more than three times the S&P 500's 1.07%. The ETF tracks 100 dividend-paying companies with at least 10 years of consecutive dividend payments and has seen its payout rise 211% over the past decade. Year-to-date performance shows 18.9% total return versus the S&P 500's 8.1%.

Matt DiLallo highlights the Schwab U.S. Dividend Equity ETF (SCHD) as his top ETF pick for 2026, praising its focus on 100 high-quality dividend growth stocks. The ETF has delivered 13.3% annualized returns since 2011 and offers a 3.4% yield, significantly above the S&P 500's 1.1%. DiLallo notes the ETF complements his existing dividend portfolio by providing exposure to quality dividend stocks he doesn't currently own, such as UnitedHealth Group.