Schwab U.S. Dividend Equity vs Vanguard High Dividend Yield -- the two most popular dividend ETFs go head-to-head. Here is every metric that matters.
$116B+
Combined assets under management
0.06%
Identical expense ratios
~30%
Holdings overlap between funds
All data as of February 2026
| Metric | SCHD | VYM | Winner |
|---|---|---|---|
| Full Name | Schwab U.S. Dividend Equity | Vanguard High Dividend Yield | -- |
| Expense Ratio | 0.06% | 0.06% | Tie |
| Dividend Yield | 3.5% | 2.8% | SCHD |
| Number of Holdings | ~100 | ~500 | VYM |
| Assets Under Management | $62B | $54B | SCHD |
| 5-Year Total Return | 78.4% | 62.1% | SCHD |
| 10-Year Total Return | 218.6% | 176.3% | SCHD |
| 5-Year Dividend Growth | 12.2%/yr | 5.8%/yr | SCHD |
| Dividend Frequency | Quarterly | Quarterly | Tie |
| Inception Date | Oct 2011 | Nov 2006 | VYM |
| Index Tracked | Dow Jones U.S. Dividend 100 | FTSE High Dividend Yield | -- |
Key Takeaway:
SCHD wins on yield, total return, and dividend growth. VYM wins on diversification and longer track record. Both charge the same ultra-low 0.06% expense ratio. For most investors, the performance difference matters more than the holdings count.
Dow Jones U.S. Dividend 100 Index
SCHD uses a multi-factor quality screen that goes beyond simply finding high-yielding stocks. It selects 100 companies that score highest on:
Minimum requirement: 10 consecutive years of dividend payments.
FTSE High Dividend Yield Index
VYM takes a simpler, broader approach. It holds nearly all U.S. stocks with above-average dividend yields, excluding REITs:
Result: 500+ holdings give maximum diversification within the dividend universe.
~40% of total portfolio
~25% of total portfolio
Holdings Overlap:
About 30% of SCHD holdings also appear in VYM (Home Depot, AbbVie, Chevron, PepsiCo, and others). However, the weightings differ significantly. SCHD concentrates more in its top picks (top 10 = ~40%), while VYM spreads weight more evenly (top 10 = ~25%). If you own both funds, you get some overlap but meaningful diversification benefit.
Sector weights reveal very different investment philosophies
| Sector | SCHD | VYM | Difference |
|---|---|---|---|
| Financials | 15.8% | 21.4% | VYM +5.6% |
| Healthcare | 16.2% | 13.5% | SCHD +2.7% |
| Industrials | 18.1% | 10.2% | SCHD +7.9% |
| Technology | 11.5% | 9.8% | SCHD +1.7% |
| Consumer Staples | 13.7% | 11.9% | SCHD +1.8% |
| Energy | 8.4% | 9.1% | VYM +0.7% |
| Utilities | 2.1% | 6.8% | VYM +4.7% |
| Consumer Discretionary | 7.8% | 5.4% | SCHD +2.4% |
| Other (Comm, Materials, RE) | 6.4% | 11.9% | VYM +5.5% |
SCHD is overweight industrials, healthcare, and consumer staples -- sectors known for steady dividend growth and strong cash flows. Lower financials and utilities exposure means less interest rate sensitivity.
VYM is heavily weighted toward financials (banks, insurance) and includes more utilities. This makes it more cyclical during economic expansions and more interest-rate sensitive. Broader sector spread provides natural diversification.
Cumulative returns including reinvested dividends
| Time Period | SCHD | VYM | Difference |
|---|---|---|---|
| 1 Year | 14.2% | 12.8% | SCHD +1.4% |
| 3 Year (annualized) | 11.3% | 9.7% | SCHD +1.6% |
| 5 Year (annualized) | 12.3% | 10.1% | SCHD +2.2% |
| 10 Year (annualized) | 12.3% | 10.7% | SCHD +1.6% |
What This Means in Real Dollars:
If you invested $100,000 ten years ago with dividends reinvested:
SCHD would be worth
$318,600
VYM would be worth
$276,300
SCHD outperformed by ~$42,300 over the decade on a $100K investment.
Dividend growth is arguably more important than current yield for long-term investors. A faster-growing dividend means your income accelerates over time, and historically, stocks with rising dividends also deliver superior price appreciation.
| Metric | SCHD | VYM |
|---|---|---|
| 1-Year Dividend Growth | 13.4% | 6.2% |
| 3-Year Avg Dividend Growth | 11.8% | 5.5% |
| 5-Year Avg Dividend Growth | 12.2% | 5.8% |
| 10-Year Avg Dividend Growth | 11.5% | 6.1% |
The Crossover Effect:
Even though VYM starts with a higher effective yield on some metrics, SCHD's faster dividend growth means its yield-on-cost surpasses VYM within about 6-7 years. If you invested $10,000 today, SCHD would pay more annual dividends than VYM by roughly year 7, and the gap would widen every year after that. This is why SCHD is especially powerful for investors with a 10+ year horizon.
Tax Verdict:
Both ETFs are highly tax-efficient. VYM has a slight edge due to lower turnover and Vanguard's unique ETF share class structure (which uses its patented heartbeat trades to minimize capital gains). In a taxable account, VYM may generate marginally fewer capital gains distributions. In tax-advantaged accounts (IRA, 401k), the difference is irrelevant -- pick based on performance and yield instead.
Complete 20-page analysis with historical data, Monte Carlo projections, and portfolio allocation models
| Risk Metric | SCHD | VYM | Interpretation |
|---|---|---|---|
| Beta (vs S&P 500) | 0.82 | 0.85 | Both less volatile than market; SCHD slightly less |
| Standard Deviation (5yr) | 14.8% | 14.2% | VYM slightly less volatile (more diversified) |
| Max Drawdown (5yr) | -18.2% | -16.9% | VYM held up slightly better in worst drops |
| Sharpe Ratio (5yr) | 0.78 | 0.65 | SCHD better risk-adjusted returns |
Concentration Risk Warning:
SCHD holds only ~100 stocks with ~40% in the top 10. If any major holding has a bad year (dividend cut, earnings miss), it affects SCHD more than VYM. In 2022, SCHD's concentration in value stocks actually helped it outperform, but in other years it could work against you. VYM's 500+ holdings provide a wider safety net. If concentration risk keeps you up at night, VYM is the better sleep-at-night choice.
Many seasoned dividend investors hold both SCHD and VYM. Despite ~30% overlap, they complement each other well:
60% SCHD + 40% VYM
Growth tilt -- best for accumulators under 50. Gets SCHD's quality screening with VYM's diversification cushion.
50% SCHD + 50% VYM
Balanced approach -- good for ages 45-60. Equal emphasis on growth and breadth.
40% SCHD + 60% VYM
Income tilt -- best for retirees 60+. Maximizes diversification while still benefiting from SCHD's dividend growth.
SCHD has outperformed VYM on total return, yield, and dividend growth over the past decade. However, VYM offers broader diversification (500+ vs 100 stocks) and lower volatility. For most long-term investors reinvesting dividends, SCHD is the stronger choice. For retirees prioritizing stability and broad exposure, VYM edges ahead.
Absolutely. Despite about 30% overlap, holding both gives you SCHD's quality screening plus VYM's broader diversification. A 60/40 or 50/50 split is a popular approach among dividend investors. The overlap is not redundant -- it simply means you have extra weighting in the highest-quality dividend payers that both indexes agree on.
In a Roth IRA, choose SCHD for its higher yield and growth -- all gains are tax-free forever. In a taxable account, VYM has a slight edge due to lower turnover and Vanguard's tax-efficient ETF structure. That said, the difference is small. Performance matters more than marginal tax efficiency, so SCHD remains compelling in either account type.
In 2023, the S&P 500 was driven by the "Magnificent 7" mega-cap tech stocks (Apple, NVIDIA, etc.) that SCHD does not hold. SCHD's quality-dividend focus meant it missed that narrow rally. However, SCHD has historically bounced back strongly and has outperformed over longer periods. One year of underperformance does not invalidate the strategy.
VIG (Vanguard Dividend Appreciation) focuses on 10+ year dividend growers with a lower 2.0% yield but faster growth. DGRO (iShares Core Dividend Growth) is a balanced middle ground. Both are excellent but serve different needs. SCHD and VYM are the two largest and most liquid dividend ETFs, making them the default starting point for most investors. Consider adding VIG or DGRO as a secondary holding.