Let me tell you something that might surprise you. While everyone was panic-selling during the March 2020 crash, my friend Sarah was actually sleeping pretty well. Not because she didn't care about her portfolio (trust me, she cared), but because a big chunk of her money was in SCHD.

See, Sarah had learned something important about recessions and market crashes: they're not just tests of your investment strategy – they're tests of your ability to stick with that strategy when everything feels like it's falling apart. And that's where SCHD really shines.

Since SCHD launched in October 2011, we've seen some pretty wild market rides. The 2018 correction that had everyone questioning whether the bull market was over. The 2020 COVID crash that literally shut down the world. The 2022 bear market with inflation running hot and the Fed raising rates like there was no tomorrow.

As we dive into 2025, with all the market uncertainty we've been dealing with, understanding how SCHD behaves during tough times isn't just academic – it's practical knowledge that could help you make better decisions when the next storm hits.

Remember late 2018? If you were investing back then, you probably do – and not fondly. The S&P 500 dropped nearly 20% from its September peak to its December low. Trade war fears, rising interest rates, and general uncertainty had everyone on edge.

This was SCHD's first major test since launching in 2011. The ETF had been riding high through the post-financial crisis bull market, but how would it handle when things got rough?

Here's what really caught my attention: SCHD dropped about 11% while the broader market fell nearly 20%. But more importantly, look at what happened with dividends. While growth companies were slashing guidance and cutting spending, SCHD's underlying companies mostly kept their dividends intact.

I remember talking to investors during that period. The ones holding growth stocks were checking their portfolios obsessively, losing sleep over every market headline. But the SCHD investors? They were annoyed about the price drop, sure, but they weren't panicking. They knew their quarterly dividends were still coming.

March 2020 was unlike anything most of us had ever seen. The market didn't just fall – it plummeted. In about three weeks, we watched the S&P 500 drop over 30%. Airlines stopped flying, restaurants closed, entire industries shut down overnight.

This wasn't just a market correction; this was an existential crisis. Nobody knew how long lockdowns would last, which companies would survive, or what the economy would look like on the other side.

And yet, something interesting happened with SCHD. Yes, it fell – everything fell in March 2020. But while tech stocks were getting absolutely hammered (looking at you, high-flying growth names that lost 50%+ of their value), SCHD's decline was much more manageable.

But here's the kicker – and this is where SCHD really proved its worth. While everyone was freaking out about which companies would make it through the pandemic, SCHD's holdings were exactly the kind of businesses that tend to survive economic shocks.

Think about it: Johnson & Johnson (pharmaceuticals), Walmart (essential retail), Chevron (energy infrastructure), Coca-Cola (consumer staples). These aren't sexy growth companies, but they're the kind of businesses that keep operating even when the world feels like it's ending.

And you know what the best part was? The recovery. By August 2020, SCHD was back to its pre-COVID highs. Meanwhile, some investors were still waiting for their growth stocks to recover from the March lows.

If 2020 was about a global pandemic, 2022 was about inflation running wild and the Federal Reserve trying to tame it. This created a different kind of market stress – one that particularly hurt growth stocks and anything with sky-high valuations.

You'd think rising interest rates would hurt dividend stocks, right? Higher rates make bonds more attractive, potentially drawing money away from dividend-paying stocks. That's the theory, anyway.

But here's what actually happened: while the NASDAQ (heavy on growth stocks) got absolutely crushed, losing over 30% for the year, SCHD held up remarkably well. Sure, it was down for the year, but we're talking about a much more manageable decline.

I'll never forget a conversation I had with my neighbor in late 2022. He'd been bragging about his tech stock gains in 2021, but by December 2022, he was down about 40% from his peak. Meanwhile, my SCHD position was down maybe 5% for the year.

"How are you not more worried?" he asked me. I told him the truth: when you're getting paid to wait (via dividends), market volatility becomes much more tolerable. Plus, many of SCHD's companies were actually raising their dividends during 2022, even as the market was falling.

Here's something that always amazes me about dividend investing: even during the worst market crashes, the dividend checks keep showing up. It's like having a steady paycheck from your investments when everything else in your portfolio is going haywire.

Let's talk numbers for a second. During the three major downturns we've discussed (2018, 2020, 2022), how many of SCHD's quarterly dividend payments were cut or suspended? Practically none.

But it's not just about the psychological comfort (though that's huge). There's a practical benefit too. During market crashes, you can reinvest those dividend payments at much lower prices. It's like getting a discount on buying more shares of quality companies.

I remember during the March 2020 crash, my automatic dividend reinvestment was buying SCHD shares at prices I hadn't seen in years. Those "crisis purchases" ended up being some of my best investments as the market recovered.

Let's be brutally honest here. During bull markets, dividend stocks like SCHD often get left in the dust by high-flying growth stocks. When Tesla is up 700% and some random tech stock is doubling every few months, SCHD's steady 12% annual returns can feel pretty boring.

But then the music stops. And that's when you realize the difference between investing and speculating.

Here's a story that really drives this point home. In late 2021, I had a friend who was absolutely crushing it with growth stocks. His portfolio was up like 150% in two years. He kept telling me I was missing out by holding "boring" dividend stocks.

Fast forward to late 2022. His portfolio had given back most of those gains and then some. Meanwhile, my SCHD position was roughly flat for the year, but I'd collected about 4% in dividends along the way.

"How do you sleep at night knowing you're missing out on all these growth opportunities?" he asked me in 2021.

"How do you sleep at night knowing your retirement depends on your stocks going up forever?" I asked him in 2022.

Let's talk about something that doesn't get enough attention in investment discussions: the mental game. Knowing intellectually that market crashes are temporary is one thing. Actually holding your positions while watching your portfolio drop 20, 30, or 40% is something entirely different.

I've been through enough market cycles now to recognize the pattern. First comes the denial ("this is just a small correction"). Then the panic ("maybe I should sell before it gets worse"). Then the despair ("I should have never invested in the first place").

Here's what I've noticed about SCHD investors during market crashes: they tend to make fewer impulsive decisions. There's something about receiving regular dividend payments that makes the price volatility feel less important.

Think about it this way: if you own a rental property, you don't check its Zillow value every day. You focus on the monthly rent checks. SCHD dividends work similarly – they give you something tangible to focus on besides daily price movements.

The psychological benefit of dividend investing during crashes can't be overstated. When you're getting paid to wait, it's much easier to wait. When your investment strategy doesn't depend entirely on price appreciation, you can think more clearly during volatile periods.

Ever wondered how your SCHD investment would have performed if you'd invested right before a major market crash? This calculator shows you exactly what would have happened – including the recovery period and total dividends received.

After watching SCHD navigate through multiple market crashes, here are the key lessons I've learned that might help you when the next inevitable downturn arrives:

The most important lesson? SCHD isn't crash-proof – nothing is. But it's crash-resilient. The combination of quality companies, steady dividends, and reasonable valuations creates a buffer that helps you sleep better during market storms.

As we head into 2025 and beyond, nobody knows when the next major market downturn will hit. But based on SCHD's track record through the 2018 correction, 2020 crash, and 2022 bear market, I feel pretty confident about having it as a core holding when that next storm inevitably arrives.

Compare how different investment strategies would have performed during market volatility. This calculator shows the psychological and financial benefits of having dividend income during tough times.