Dow Year-End Rally & 2026 Value Rotation: SCHD and FDVV ETF Assessment

This analysis is based on the December 12, 2025, Seeking Alpha article [6] discussing the DJIA’s year-end rally and a projected 2026 value rotation. The DJIA has risen 19.29% from July 2024 to December 2025, aligning with the reported rally trend [0]. The anticipated 2026 rotation from high-growth tech to undervalued sectors (financials, healthcare) is driven by the Federal Reserve’s monetary policy (three rate cuts in 2025, signaling one more in 2026) and reduced fiscal uncertainty following a U.S. government shutdown [5].

The article identifies SCHD and FDVV as top dividend/value ETF picks for this rotation, noting moderately high payout ratios above 60% that may limit dividend growth [6]. However, conflicting data from other sources shows SCHD with a ~56% payout ratio and FDVV with ~58.85% [0][1][2][3][4], suggesting a potential discrepancy in calculation methodologies (e.g., forward vs. trailing weighted average ratios). Key metrics for the ETFs as of December 12, 2025 (after hours), include: SCHD at $27.68 with a 3.80%–4.73% dividend yield, 19.45M volume, and $71.45B market cap [0]; FDVV at $56.98 with a ~3.02%–3.10% yield, 725.83K volume, and $7.69B market cap [0].

1. The DJIA’s 19.29% rally since July 2024 [0] provides a positive backdrop for the anticipated 2026 value rotation, aligning with broader market expectations of shifting sector leadership [5].
2. The payout ratio discrepancy underscores the importance of verifying calculation methodologies (e.g., forward vs. trailing) when evaluating ETF dividend sustainability, as different approaches can yield varying results.
3. SCHD’s limited tech exposure [2] and FDVV’s tech overweight [3] create distinct risk profiles: FDVV faces potential corrections if tech underperforms, while SCHD may lag if tech resumes market leadership.

• The projected 2026 value rotation could benefit value-focused ETFs like SCHD and FDVV as capital shifts from high-growth tech to undervalued sectors [5].
• Both ETFs offer competitive dividend yields (3.80%–4.73% for SCHD, ~3.02%–3.10% for FDVV) [0][1][3], appealing to income-seeking investors.

• Payout ratios approaching 60% (as reported by most sources) may restrict future dividend growth for both ETFs [6][0][1][2][3][4].
• The 2026 value rotation is contingent on Fed rate cuts and stable fiscal policy, which are subject to change based on economic conditions [5].
• Sector exposure differences create volatility risks: FDVV’s tech weighting exposes it to potential sector corrections, while SCHD’s defensive focus may underperform if tech reclaims market leadership [2][3].

The DJIA has experienced a significant rally since July 2024, with a 2026 value rotation from high-growth tech to value sectors (financials, healthcare) expected. SCHD and FDVV are identified as potential ETF picks for this rotation, with key metrics showing competitive yields but payout ratios approaching 60%. A discrepancy in reported payout ratios highlights the need for careful metric verification, and sector exposure differences create distinct risk profiles. Investors should monitor Fed policy, economic conditions, and ETF prospectuses for updated information.