Schwab U.S. Dividend Equity ETF (SCHD) is one of the most popular ETFs in the world with $63B in assets. We screened every single holding — all 104 stocks — against Shariah standards using the Halal Terminal API to give you a definitive, data-backed answer.

Verdict: SCHD is NOT Shariah-Compliant

NOT Shariah-compliant. Banks, tobacco, and alcohol companies make up a significant portion of holdings. No direct halal equivalent exists — consider SPUS/HLAL or a custom compliant dividend portfolio.

Screening Results at a Glance

MetricValue
Total Holdings104
Compliant Holdings68
Non-Compliant Holdings36
Compliance Rate65.4%
Weighted Compliance61.2%
Purification Rate5.2%
Expense Ratio0.06%
AUM$63B

Why SCHD Fails Shariah Screening

SCHD is the darling of dividend investors — $63 billion in assets and one of the most discussed ETFs on investing forums. But for Muslim investors, it has a fundamental problem: dividend-focused ETFs naturally overweight financial and consumer staples sectors, which are the two sectors most likely to fail Shariah screening.

Banks and financial companies pay some of the highest dividends in the market, so any methodology that selects for dividend yield will inevitably include them. SCHD holds multiple regional banks (US Bancorp, Fifth Third, KeyCorp), insurance companies, and financial services firms.

Additionally, SCHD holds tobacco (Philip Morris) and alcohol companies (Constellation Brands, Molson Coors) — direct business activity failures regardless of financial ratios.

The halal dividend dilemma: Shariah screening removes the highest-yielding sectors (financials, tobacco, alcohol), which means a truly halal dividend ETF will have a lower yield than SCHD. Currently, there is no purpose-built halal high-dividend ETF equivalent. Your best options are SPUS or HLAL (which include dividend-paying compliant stocks) or building a custom portfolio of compliant dividend stocks.

Top Compliant Holdings

These SCHD holdings pass Shariah screening:

  1. ABBV (pharma)
  2. AMGN (biotech)
  3. HD (home improvement)
  4. PEP (beverages)
  5. CSCO (networking)
  6. TXN (semiconductors)
  7. AVGO (semiconductors)

Non-Compliant Holdings

These holdings fail and are the primary reason SCHD is not compliant:

  1. PFG (financial services — Principal Financial)
  2. USB (banking — US Bancorp)
  3. FITB (banking — Fifth Third)
  4. KEY (banking — KeyCorp)
  5. LMT (defense — Lockheed Martin)
  6. PM (tobacco — Philip Morris)
  7. STZ (alcohol — Constellation Brands)
  8. TAP (alcohol — Molson Coors)

Halal Alternatives

For similar market exposure with full Shariah compliance:

For a full comparison, see our Best Halal ETFs for 2026 guide.

Screen SCHD Yourself

curl https://api.halalterminal.com/api/etf/SCHD/screening \
  -H "X-API-Key: YOUR_KEY"
import requests

resp = requests.get(
    "https://api.halalterminal.com/api/etf/SCHD/screening",
    headers={"X-API-Key": "YOUR_KEY"}
)
data = resp.json()

print(f"Compliance Rate: {data['compliance_rate']}%")
print(f"Compliant: {data['compliant_holdings']}/{data['total_holdings']}")
print(f"Purification: {data['purification_rate']:.1%}")

for h in data["holdings"]:
    if h["compliance_status"] != "compliant":
        print(f"  FAIL: {h['symbol']} ({h['weight']:.1%} weight)")

Two ways to screen

Halal Terminal

Screen stocks and ETFs interactively with real-time data, multi-methodology verdicts, and transparent financial ratios.

Open Terminal → Developers: Use the API

Key Takeaways