We recently published a list of the 10 Best Value Dividend Stocks to Buy According to Billionaires. In this article, we are going to take a look at where The Charles Schwab Corporation (NYSE:SCHW) stands against other best value dividend stocks.
Dividends, though sometimes underappreciated, have significantly contributed to long-term investor gains. Between 1960 and the end of the previous year, reinvested dividends and the effects of compounding accounted for about 85% of the S&P Index’s total return. Dividend-oriented strategies offer the advantage of steady income, improved portfolio stability, and a potential buffer during uncertain economic periods—making them a strong choice for all-weather portfolios.
With ongoing tariff tensions in the US adding to market volatility, many investors have begun favoring dividend-focused approaches to strengthen their portfolios. After a stretch where growth stocks took center stage, dividend investing has started to regain traction. According to a report by Franklin Templeton, US-listed dividend ETFs recorded average monthly net inflows of nearly $3.3 billion during the six months leading up to January 31, 2025—up sharply from just $107 million during the same period a year earlier.
Given the uncertain global environment, investors have increasingly leaned toward more reliable components to maintain portfolio balance. Dividend-paying stocks—particularly those backed by strong fundamentals—have emerged as a preferred option due to their ability to generate stable and predictable cash flows. Since these cash flows play a central role in equity valuation models, determining the intrinsic value of dividend stocks typically involves less uncertainty compared to valuing growth-oriented equities. As a result, such stocks are seen as a stabilizing force within a diversified investment strategy.
According to analysts, the strength of dividend-paying stocks lies in their capacity to cushion portfolio losses during market downturns while still providing a meaningful upside. Historically, dividend strategies have shown defensive qualities across different regions and time periods. Data for the three-year span ending December 31, 2024, revealed that dividend stocks experienced lower volatility and smaller maximum drawdowns than the broader market in global, US, and European segments. Notably, when concerns over inflation and rising interest rates resurfaced in August, dividend stocks proved more resilient than their growth-focused counterparts.
Historically, income-focused investing often leans heavily toward value stocks, as investors typically look for companies offering high dividend yields and lower valuation multiples. However, a report by S&P Dow Jones Indices points out that the Dividend Aristocrats Index strikes a balance between both value and growth characteristics. Since 1999, the index has maintained an average composition of roughly 60.5% value stocks and 39.5% growth stocks, showing no consistent bias toward either investing style. Analysts maintained that a portfolio combining strong dividend yield, consistent dividend growth, and resilience in payouts should always remain relevant. They noted that even without relying on market revaluation, the combination of income and income growth could support projected nominal gross returns exceeding 10% annually.
A corporate finance professional studying a financial performance chart.
Our Methodology
For this article, we scanned Insider Monkey’s Q4 2024 proprietary database of billionaires’ stock holdings and identified dividend stocks from the list. From that group, we picked dividend stocks with forward P/E ratios below 20, as of April 13. The stocks are ranked according to the number of billionaires having stakes in them. Where two or more stocks were tied on billionaire sentiment, we used forward P/Es as a tiebreaker between them.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
The Charles Schwab Corporation (NYSE:SCHW)
Number of Billionaire Holders: 19
Forward P/E Ratio as of April 13: 18.55
The Charles Schwab Corporation (NYSE:SCHW) is an American financial services company, based in Texas. The company is a pioneer in discount brokerage, has grown into the largest stock brokerage firm, offering a wide range of financial services, including stock trading, retirement accounts, and banking products. In addition to its investment services, Schwab provides a popular checking account with unlimited ATM fee rebates worldwide and no foreign transaction fees. As of January 2025, the company manages $10.33 trillion in assets, up from $10.1 trillion in 2024.
In the fourth quarter of 2024, The Charles Schwab Corporation (NYSE:SCHW) reported $5.3 billion in revenue, a 20% increase from the previous year, driven by higher client activity and a 5% rise in active brokerage accounts to 36.5 million. The integration of TD Ameritrade added $1.6 trillion in client assets, strengthening Schwab’s market position. Net interest revenue reached $2.53 billion, while asset management and administration fees brought in $1.5 billion.
The Charles Schwab Corporation (NYSE:SCHW) maintained a strong cash position, ending the quarter with over $42 billion in cash and cash equivalents, up from $35 billion in the prior quarter. On January 29, the company raised its quarterly dividend by 8% to $0.27 per share. The stock offers a dividend yield of 1.40%, as of April 13. It has been making regular dividends to shareholders since 1990.
Overall, SCHW ranks 2nd on our list of the best value dividend stocks to buy according to billionaires. While we acknowledge the potential of SCHW as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than SCHW but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
