Key Points
The Invesco QQQ Trust is focused on the best and most valuable growth stocks on the Nasdaq exchange.
The Schwab U.S. Dividend Equity ETF gives investors access to a wide range of safe dividend stocks.
Together, these two funds can give investors an excellent mix of both growth and dividend stocks.
10 stocks we like better than Invesco QQQ Trust ›
If you’re getting started with investing, or if you just want to add some pillars that you can build your portfolio around, investing in a couple of exchange-traded funds (ETFs) can make the process easy. By focusing on dividends and long-term growth, you can ensure you’re getting a good mix of assets that can help your portfolio rise in value over the years, while also generating some reliable and recurring income.
Two ETFs that could be ideal for this purpose are the Invesco QQQ Trust (NASDAQ: QQQ) and the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). With these two funds, you can get the best of both worlds: Plenty of dividend income, and tremendous growth potential.
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Invesco QQQ Fund
The Invesco QQQ Fund is popular with growth investors as it gives you exposure to the Nasdaq-100 index, which is a collection of the 100 largest non-financial stocks on the exchange. The big benefit of this ETF is that you don’t have to worry about keeping up with the latest trends. If you don’t know anything about quantum computing, artificial intelligence, or any other hot trends in tech, you don’t need to. The ETF will rebalance on a regular basis, so you’ll always have exposure to the top (non-financial) stocks on the exchange.
It’s a good way to ensure you aren’t missing out on any big growth opportunities. You’ll have exposure not only to tech giants like Nvidia and Microsoft, but to smaller stocks such as DexCom and The Trade Desk, which have market caps of less than $40 billion. You’ll miss out on smaller stocks, but that also means you can avoid the risk and volatility that can come with investing in small- and mid-cap stocks.
The QQQ Fund makes a lot of sense as a “buy-and-forget” investment, as its gains can add up significantly over the years. Its expense ratio is 0.2%. While there are lower-fee ETFs out there, Invesco’s focus on top growth stocks makes QQQ a compelling option nonetheless, as its strong gains can more than offset those fees. After all, this is a fund that has soundly outperformed the S&P 500 over the past several years.
Schwab U.S. Dividend Equity ETF
If you’re investing for the long haul, you’ll probably also want to collect a good, reliable dividend along the way. This is where the Schwab U.S. Dividend Equity ETF comes into play. It yields approximately 4%, which is a far higher payout than what you’ll get with the average S&P 500 stock — 1.2%.
The Schwab ETF also has a much smaller expense ratio at 0.06%, so fees won’t take a big chunk out of your returns or dividend income. By focusing on stocks that offer safe and sustainable dividend payments and factoring in financial ratios, this ETF also ensures that you don’t have exposure to high-risk dividend stocks whose payouts may be in imminent danger of being cut.
Some of the notable names in the ETF include Chevron, Home Depot, and Cisco Systems, giving you a good mix of different sectors and industries. No one stock accounts for even 5% of the fund’s overall holdings, which means you aren’t too dependent on any one company.
Not only is this Schwab ETF a good dividend investment, it has also generated strong gains for investors over the past five years, amassing returns of more than 50% during that timeframe — without even factoring in its dividend payments.
Between the Schwab U.S. Dividend ETF and the QQQ Fund, you’ll have a couple of solid funds that can provide your portfolio with long-term stability, terrific growth prospects, and some excellent dividend income.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron, Cisco Systems, Home Depot, Microsoft, Nvidia, and The Trade Desk. The Motley Fool recommends DexCom and Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft, long January 2027 $65 calls on DexCom, short January 2026 $405 calls on Microsoft, and short January 2027 $75 calls on DexCom. The Motley Fool has a disclosure policy.
