Is SCHD (Schwab US Dividend Equity ETF) halal?

Q: Is SCHD (Schwab US Dividend Equity ETF) halal?

HARAM: Dividend-focused ETF with heavy financial sector exposure. SCHD is a dividend-focused U.S. equity pass-through ETF. Its February 28, 2026 report shows $86.151 billion of assets and disclosed incidental interest/securities-lending income of about 0.03% of fund investment income. Conventional banks, insurers and other mixed businesses require issuer-level review; the fund is not Sharia-screened.

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SCHD

Schwab US Dividend Equity ETF

HARAM — DATA INCOMPLETEetf

Is SCHD Halal?

Dividend-focused ETF with heavy financial sector exposure.

What You Should Know

SCHD is a dividend-focused U.S. equity pass-through ETF. Its February 28, 2026 report shows $86.151 billion of assets and disclosed incidental interest/securities-lending income of about 0.03% of fund investment income. Conventional banks, insurers and other mixed businesses require issuer-level review; the fund is not Sharia-screened.

⚠️ Concerns

•High bank/financial exposure
•Insurance companies
•No Sharia screening

Current quantitative Sharia screen

Based on N-CSRS Semiannual Shareholder Report figures for the period ended 2026-02-28; calculated 2026-07-14.

USD · millions

Interest-bearing debt / assets

0.00%Within limit

Below 33.333% under FTSE Yasaar

0 / 86,151.222

Cash + interest-bearing securities / assets

0.07%Within limit

Below 33.333% under FTSE Yasaar

56.083 / 86,151.222

Receivables + cash / assets

0.31%Within limit

Below 50% under FTSE Yasaar

265.467 / 86,151.222

Non-compliant income / revenue

0.03%Within limit

No more than 5% under FTSE Yasaar

0.455 / 1,450.475

Methodology	Financial	Overall	What drives it
FTSE Yasaar v4.6, February 2026	Pass	Incomplete	Debt/assets is 0.00%, liquidity/assets is 0.07%, receivables-plus-cash/assets is 0.31% and disclosed incidental non-compliant income is 0.03%; issuer activity remains incomplete at fund level.
MSCI Islamic (total-assets series) October 2024 methodology	Pass	Incomplete	Fund-level debt, liquidity and receivables-plus-cash are below examined MSCI asset limits, but a universal underlying prohibited-revenue numerator is unavailable.
Malaysia SAC financial ratios single 5% activity benchmark adopted November 2025	Pass	Incomplete	Fund-level financial ratios are below the examined Malaysia limits; the pass-through portfolio remains qualitatively incomplete.
Market-cap denominator methods MSCI M-Series, S&P and Dow Jones methods differ	Not calculated	Incomplete	A licensed historical market-cap series and fund-level prohibited-income convention are not stored.

FTSE Yasaar

v4.6, February 2026

Financial: Pass
Overall: Incomplete

Debt/assets is 0.00%, liquidity/assets is 0.07%, receivables-plus-cash/assets is 0.31% and disclosed incidental non-compliant income is 0.03%; issuer activity remains incomplete at fund level.

MSCI Islamic (total-assets series)

October 2024 methodology

Financial: Pass
Overall: Incomplete

Fund-level debt, liquidity and receivables-plus-cash are below examined MSCI asset limits, but a universal underlying prohibited-revenue numerator is unavailable.

Malaysia SAC financial ratios

single 5% activity benchmark adopted November 2025

Financial: Pass
Overall: Incomplete

Fund-level financial ratios are below the examined Malaysia limits; the pass-through portfolio remains qualitatively incomplete.

Market-cap denominator methods

MSCI M-Series, S&P and Dow Jones methods differ

Financial: Not calculated
Overall: Incomplete

A licensed historical market-cap series and fund-level prohibited-income convention are not stored.

Business-activity disclosure

SCHD is a pass-through dividend ETF holding U.S. companies selected for dividend quality. The portfolio includes conventional banks, insurers and other mixed businesses; the fund does not provide a school-neutral prohibited-revenue allocation across every issuer.

Limitation: The report provides holdings, sector weights and fund-level income, not a universal prohibited-revenue allocation across all issuers.

Purification

SCHD passes through dividends from underlying issuers; no scholar-approved purification percentage is inferred from the aggregate fund distribution.

Inputs, assumptions and primary sources

Amounts are USD millions converted from SCHD's unaudited February 28, 2026 semiannual statements.
The fund reports USD 86,151.222054 million of total assets, USD 35.905572 million of affiliated investments, USD 20.177355 million of cash and futures deposits and USD 245.289415 million of receivables.
Six-month investment income totals USD 1,450.474775 million. Disclosed other interest and securities-lending income of USD 0.455377 million is used as the incidental non-compliant-income numerator; underlying issuer revenue is not allocated by the fund.
ETF look-through ratios are not an official FTSE, MSCI or Malaysia classification.

Charles Schwab Investment Management: Schwab U.S. Dividend Equity ETF semiannual report for February 28, 2026 Charles Schwab Investment Management: Schwab U.S. Dividend Equity ETF product page FTSE Russell: FTSE Yasaar Global Equity Shariah Index Series Ground Rules MSCI: MSCI Islamic Index Series Methodology Securities Commission Malaysia: Shariah-Compliant Securities Screening Methodology

This is a reproducible financial screen, not a fatwa. A failed total-assets screen can coexist with a pass under a market-cap methodology. ZakatInvest keeps the qualitative assessment separate so numerical thresholds do not erase material context.

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