Overview

The Dividend Drought explores the surprising underperformance of the Schwab U.S. Dividend Equity ETF (SCHD) in 2025, a year marked by macroeconomic turbulence, rising interest rates, and changing investor expectations. Once hailed as a cornerstone of income investing, SCHD found itself struggling in a financial landscape that no longer rewarded traditional dividend strategies. Through the dual perspectives of seasoned portfolio manager Jonathan Reed and data-driven analyst Maya Chen, the book unpacks the structural, sectoral, and psychological factors behind the ETF's disappointing returns-and challenges the belief that passive, high-dividend strategies can thrive in all environments. As the story unfolds, it becomes clear that SCHD's challenges were not due to flaws in its design, but to a market that had outgrown its underlying assumptions. Investors had anchored themselves to yield as a signal of safety and stability, often ignoring the broader shifts in monetary policy, sector leadership, and inflation expectations. The narrative follows Jonathan and Maya as they wrestle with questions of portfolio construction, behavioral finance, and fiduciary duty, ultimately guiding clients-and themselves-through a process of strategic evolution and emotional unlearning. In the end, The Dividend Drought is not a condemnation of dividend investing, but a call to rethink it. The book proposes a more adaptive, diversified, and macro-aware approach to generating income, one that places total return, flexibility, and client understanding at the center. By moving beyond legacy products and static allocations, Jonathan and Maya demonstrate that real investment success lies not in holding on to what once worked, but in building portfolios that are prepared for what comes next.

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