But let’s take a step back and ask why this is important.

After spending years building up your nest egg, you want to step into the retirement you deserve — whether that means relocating to a dream destination, traveling more, spending more time with family, or simply enjoying the comfort of your finances.

What you don’t want is constant stress about market swings, inflation quietly eroding your purchasing power, or the fear of outliving your savings.  You also don’t want to live on the scant 0.6% from your average savings account.

Collect 3.38% Every Quarter

One way to do that is by investing in a safe, high-yielding exchange traded fund (ETF), like the Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD). With an ultra-low expense ratio of 0.06%, the SCHD ETF tracks the total return of the Dow Jones U.S. Dividend 100 Index. The fund currently holds 101 dividend-paying stocks, including blue-chip names such as Bristol Myers Squibb (NYSE: BMY), Merck & Co. (NYSE: MRK), ConocoPhillips (NYSE: COP), Lockheed Martin Corp. (NYSE: LMT), Chevron (NYSE: CVX), Verizon Communications Inc. (NYSE: VZ), and Cisco Systems (NASDAQ: CSCO).

SCHD pays a quarterly dividend, making it a reliable source of regular income. It last paid out just over 27 cents per share on December 15. Before that, it distributed just over 26 cents per share on September 29 and just over 26 cents per share again on June 30. That kind of consistency is exactly what retirees need when planning monthly expenses.

The ETF is also up about 15% since the start of the year after a lackluster 2025. This is a reminder that dividend-paying ETFs can offer growth potential alongside income.

High Standards, Built-In Stability

What really sets SCHD apart from other dividend-paying ETFs is its strict eligibility criteria. To even be considered for inclusion, a company must have at least 10 consecutive years of dividend payouts, a market cap of no less than $500 million, and an average three-month daily trading volume of at least $2 million. In short, the ETF doesn’t accept any slouches. SCHD also favors companies carrying little to no debt, adding an extra layer of stability that matters when volatility picks up.

This disciplined, rules-based approach is one reason SCHD has earned a strong reputation among investors who prioritize quality over yield-chasing. Many dividend-paying ETFs simply sweep up the highest yields available without regard for financial health — SCHD takes the opposite approach, screening for durability first.

The SCHD ETF Will Rebalance in March

In just weeks, the SCHD ETF will also undergo its annual rebalancing. This time around, it’s again expected to rotate out of stocks with compressed yields and into stocks with higher yields, which should include stocks in the financial and healthcare sectors.

For investors keeping an eye on dividend-paying ETFs heading into the spring, this rebalancing could create a timely entry point. It offers a strong alternative. Owning a high-quality dividend ETF like SCHD can be a powerful step toward turning your hard-earned nest egg into lasting financial security.

A Smarter Alternative to Your Savings Account

The SCHD ETF has proven to be a reliable choice for those seeking income, stability, and long-term growth. And it provides all of that in a single, low-cost fund. For investors who want to replace the unreliable interest of a savings account with a consistent quarterly paycheck, without taking on excessive risk, SCHD offers a compelling alternative.

Owning a high-quality dividend-paying ETF like SCHD can be a powerful step toward turning your hard-earned nest egg into lasting financial security — and the kind of retirement you’ve actually been working toward.

That’s a topic for another article on another day. In this article, I’m just taking you where the data is leading. It starts with the iShares U.S. Aerospace & Defense ETF (BATS: ITA), an industry proxy. It’s up more than 44% year-to-date.  

That’s a nice gain. However, there are some individual stocks within the ETF that are doing 10% or 20% better, and some that are even doing better than that. But as every fund investor knows, when it comes to an ETF, you have to take the trash with the treasure.  

That sounds harsh, but some of the stocks inside this ETF are lagging the market. That includes some “big names” that have a negative return this year.  

The question is, are these valuations justified? They may be. Critics will argue that as the defense industry transitions into new technologies, it’s becoming more opaque. On the other hand, these new technologies are redefining the nature of battle and mean a rethinking of the nation’s military industrial complex.  

If you’re comfortable investing in the ITA ETF, here are two defense stocks that may make you reconsider that decision. I’ll also look at one “big name” defense stock that is a laggard, but perhaps not for long.  

RTX: The Mega Cap Beast That Continues to Gain Strength 

RTX (NYSE: RTX) may be more familiar to investors by its former name Raytheon. That was before it became the parent company of Pratt & Whitney and Collins Aerospace. The company is a dominant force in the defense sector, particularly with many of the cutting-edge technologies that the modern military needs.  

RTX has a backlog of $251 billion. That’s close to three years of revenue and provides strong visibility of the company’s future revenue and earnings. Much of this backlog comes from aircraft engines and defense systems that will remain essential to U.S. and allied militaries for years to come. 

RTX is also well-positioned to benefit from the Trump administration’s Golden Dome initiative, a proposed multi-layer missile defense system that would rely heavily on Raytheon’s radar, interceptors, and command systems. This project could mirror the strategic scale of Cold War–era programs, offering RTX a long runway of defense-driven growth. 

The stock is up about 54% year-to-date, outpacing the broader defense sector and contributing significantly to the ITA ETF’s strong performance. In what will be a familiar theme for these defense stocks, RTX stock has a current price-to-earnings (P/E) ratio of 36x, well above its historic average. But its forward P/E ratio is around 28x, which puts it firmly in line with its own history.  

Investors also benefit from a solid dividend, with a 1.52% yield, and backed by consistent free cash flow, which is expected to come in at over $7 billion in 2025.

GE Aerospace: The New Powerhouse of Modern Defense 

GE Aerospace (NYSE: GE) officially separated from General Electric in April 2024, and the streamlined, defense-focused business has quickly become one of the darlings of Wall Street. GE stock is up more than 86% year-to-date, powered by record demand for jet engines, defense propulsion systems, and advanced avionics.  

A key advantage for GE Aerospace is its strong position in both commercial and military aviation. As the global fleet expands and nations modernize their air forces, GE’s LEAP and GE9X engines remain indispensable.  

Defense programs like the F-35 and B-52 re-engine initiative further enhance its growth outlook. The company is also moving aggressively into AI-driven predictive maintenance and digital twin technologies, which improve reliability and reduce downtime for defense clients. 

Financially, GE Aerospace boasts expanding margins, a growing backlog exceeding $135 billion, and rising free cash flow. With its new focus, the company trades at a premium valuation, but investors see it as a best-in-class operator that combines industrial discipline with defense-sector momentum.  

Lockheed Martin: The Comeback Kid of Defense Stocks 

Lockheed Martin (NYSE: LMT) is synonymous with the defense industry for good reason. The company is the country’s largest defense contractor, with a backlog of over $179 billion. That’s over two years of the company’s revenue.  

However, LMT stock is down 5.5% year-to-date and is down 19.5% in the last 12 months. The reason is that many defense contractors, even the largest names like Lockheed Martin, are subject to the whims of the federal government.  

But wait, you say. Didn’t the government increase the defense department’s budget to record levels? It did as part of the Trump administration’s One Big Beautiful Bill.  

However, at the beginning of the year, some defense contracts were put on hold, subject to review by the Department of Government Efficiency (DOGE). The government shutdown also paused some of these projects.  

But the government is reopening and, as of this writing, that will include funding for the defense budget through 2026 regardless of what shenanigans happen in the interim. That’s a bullish sign for a company that recently added $2 billion to its share buyback capacity.  

LMT stock trades at a current P/E ratio of around 25x earnings, which is a premium to its historical average. However, the stock’s forward P/E ratio of 16x puts the stock at a discount. Shareholders also get a safe dividend that yields over 3% and has increased for 22 consecutive years.