Should Passive Income Investors Be Concerned That 54% of the High-Yield Schwab U.S. Dividend Equity ETF Is in Just 3 Stock Market Sectors?

This ETF is a low-cost way to generate a high yield from a variety of stocks.

With $69 billion in net assets and a mere 0.06% expense ratio, the Schwab U.S. Dividend Equity ETF ( SCHD -1.07% ) is a popular tool for investors to get exposure to around 100 dividend-paying stocks without racking up high fees.

The exchange-traded fund (ETF) sports a 3.7% 30-day SEC yield, which is roughly three times higher than the 1.2% yield that investors can get from an S&P 500 ( ^GSPC 0.22% ) index fund.

However, the fund is highly concentrated in just a handful of sectors. Here are the pros and cons of the sector concentration and if the ETF is a good buy for income investors.

Betting big on high-yield sectors

The Dividend Equity ETF achieves its high yield by investing in comp