Schwab Dividend ETF to Debut Wednesday

Charles Schwab

is expanding its ETF lineup once again, this time with the debut of the Schwab US Dividend Equity ETF

on Wednesday Oct. 19, 2011. In typical Schwab fashion, the new ETF isn't the most original concept on the market, but it features a minute expense ratio of just 0.17%. SCHD will track the Dow Jones U.S. Dividend 100 Index. To be included in that index, companies must have market caps of at least $500 million and have maintained at least 10 consecutive years of dividend payments. The market cap-weighted index excludes REITs, master limited partnerships, preferred stocks and convertibles. Index constituents are evaluated on the following traits: Cash flow to total debt, return on equity, dividend yield and 5-year dividend growth rate. Companies can be removed it appears their dividends may be in danger of a cut or suspension. In an effort to keep the Schwab US Dividend Equity ETF somewhat diversified, no single stock will get a weight of more than 4.5% and no sector will receive an allocation greater than 25%. SCHD looks like it could be a possible rival to the SPDR S&P Dividend ETF

, which has an expense ratio of 0.35%, and the iShares Dow Jones Select Dividend Fund

, which has an expense ratio 0.4%. California-based Schwab had 14 ETFs with $4.1 billion in assets under management at the end of September, according to data from the National Stock Exchange.