Two of the best dividend growth ETFs take different paths to the same goal. iShares goes broad, Schwab goes concentrated. Here is which approach wins.
iShares Core Dividend Growth ETF
Schwab U.S. Dividend Equity ETF
The key philosophical difference: DGRO casts a wide net and applies basic sustainability screens, while SCHD is highly selective with multi-factor quality ranking. DGRO's approach captures more companies (including newer dividend payers like Apple and Microsoft), while SCHD focuses on proven, financially strong dividend champions.
| Metric | DGRO | SCHD | Winner |
|---|---|---|---|
| 1-Year Total Return | 10.8% | 8.2% | DGRO |
| 3-Year Total Return | 8.5% | 7.8% | DGRO |
| 5-Year Total Return | 10.8% | 11.5% | SCHD |
| Since Overlap (2014-2026) | 11.3% | 11.1% | DGRO |
| Current Dividend Yield | 2.32% | 3.45% | SCHD |
| 5-Year Dividend Growth | 10.2% | 12.1% | SCHD |
| Expense Ratio | 0.08% | 0.06% | SCHD |
| Max Drawdown (5yr) | -22.8% | -19.8% | SCHD |
| Number of Holdings | 420+ | 103 | DGRO |
The total return battle is remarkably close, with DGRO slightly ahead in recent years due to its higher tech allocation benefiting from the AI rally. However, SCHD wins decisively on current yield and dividend growth rate, making it the better choice for income investors.
| Sector | DGRO | SCHD | Notable Difference |
|---|---|---|---|
| Technology | 18.4% | 11.7% | DGRO has much more tech |
| Financials | 17.2% | 18.2% | Similar |
| Healthcare | 16.8% | 15.8% | Similar |
| Industrials | 11.2% | 12.1% | Similar |
| Consumer Staples | 9.4% | 13.4% | SCHD more defensive |
| Energy | 8.1% | 10.5% | SCHD overweight |
| Consumer Disc. | 6.8% | 7.8% | Similar |
| Utilities | 5.3% | 0% | DGRO includes utilities |
DGRO's 18.4% technology allocation (including Apple, Microsoft, and Broadcom) gives it a meaningful growth tilt compared to SCHD's 11.7%. DGRO also includes utilities, which SCHD excludes entirely. Meanwhile, SCHD has heavier consumer staples and energy exposure for more defensive positioning.
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420+
DGRO Holdings
~65%
Overlap (SCHD in DGRO)
103
SCHD Holdings
Approximately 65% of SCHD's holdings also appear in DGRO, since DGRO's broad 420-stock universe captures most of SCHD's quality names. However, the weights differ significantly: SCHD concentrates more in its top holdings while DGRO spreads the weight more evenly. This makes holding both somewhat redundant -- choose one based on your priorities.
| Year | DGRO Income | SCHD Income | Gap |
|---|---|---|---|
| Year 1 | $2,320 | $3,450 | $1,130 |
| Year 5 | $3,760 | $6,110 | $2,350 |
| Year 10 | $6,090 | $10,830 | $4,740 |
| Year 15 | $9,860 | $19,200 | $9,340 |
| Year 20 | $15,960 | $34,050 | $18,090 |
Assumes 10.2% dividend growth (DGRO) and 12.1% (SCHD), dividends reinvested. Projections are illustrative.
Key Insight: Despite only a 2% difference in annual dividend growth rate (10.2% vs 12.1%), SCHD generates more than double DGRO's income by year 20. This is because SCHD starts with 49% higher yield AND grows faster. The compounding difference is enormous.
Both are excellent for beginners. DGRO is slightly simpler conceptually (buy companies growing their dividends, broadly diversified) while SCHD requires understanding its quality-factor approach. If you want "set it and forget it" diversification, DGRO edges ahead. If you want higher income, SCHD wins.
You can, but there is significant overlap (~65%). You are essentially double-weighting the stocks that appear in both funds. Unless you specifically want to tilt toward both broad diversification and quality concentration, picking one is simpler and more efficient.
SCHD has historically held up better during market downturns. Its quality screening and value tilt provide a natural defensive buffer. In 2022, SCHD fell about 3% less than DGRO. SCHD's lower beta (0.82 vs 0.88) confirms its more defensive character.
Yes, DGRO holds both Apple (~3.5% weight) and Microsoft (~3.2% weight) as top holdings since both have established consistent dividend growth histories. SCHD does not hold either because they do not meet its higher yield threshold. This is a key differentiator.
DGRO generates less taxable income due to its lower 2.32% yield (vs SCHD's 3.45%). Both pay primarily qualified dividends taxed at preferential rates. For taxable accounts where you want to minimize annual tax drag, DGRO has a slight advantage.