SCHD and VYM Head-to-Head
Dividend investing is a time-tested way to build wealth and generate passive income. Two of the most popular dividend ETFs in 2025 are:
SCHD (Schwab U.S. Dividend Equity ETF)
VYM (Vanguard High Dividend Yield ETF)
Both are low-cost, liquid, and tax-efficient, but they differ in strategy, holdings, and performance. This guide breaks down SCHD vs VYM across all key metrics so you can decide which fits your investment goals.
Quick Comparison Table: SCHD vs VYM
| Feature | SCHD | VYM |
|---|---|---|
| Issuer | Charles Schwab | Vanguard |
| Inception Date | Oct 2011 | Nov 2006 |
| Expense Ratio | 0.06% | 0.06% |
| Dividend Yield (2025 est.) | ~3.3% | ~3.1% |
| Holdings | ~100 | ~450 |
| Index Tracked | Dow Jones U.S. Dividend 100 Index | FTSE High Dividend Yield Index |
| Selection Focus | Quality + Dividend Growth | High Dividend Yield |
| Top Sectors | Industrials, Tech, Financials | Financials, Healthcare, Consumer Staples |
| 5-Year Performance (as of Q1 2025) | ~10.8% annualized | ~8.5% annualized |
1. Dividend Strategy: Growth vs Yield
SCHD: Quality + Dividend Growth
SCHD selects companies based on:
Dividend consistency (10+ years of payments)
Strong fundamentals: return on equity, dividend growth, free cash flow
Focused selection: only 100 stocks that pass a strict quality screen
SCHD favors companies with both high and growing dividends. Think PepsiCo, Texas Instruments, and Broadcom.
VYM: Broad High Dividend Yield
VYM casts a wider net, including:
~450 large-cap U.S. stocks
Companies with above-average dividend yields
No strict quality screen (some cyclical sectors included)
VYM includes many slow-growth but high-yield names like JPMorgan, ExxonMobil, and Johnson & Johnson.
2. Dividend Yield Comparison
| Year | SCHD Yield | VYM Yield |
|---|---|---|
| 2021 | 3.2% | 2.8% |
| 2022 | 3.4% | 3.1% |
| 2023 | 3.3% | 3.0% |
| 2024 (est.) | 3.3% | 3.1% |
Takeaway:
SCHD typically offers a slightly higher yield due to its focus on companies with strong free cash flow and shareholder return policies. However, VYM’s yield is more consistent across sectors and market cycles.
3. Sector Allocation
| Sector | SCHD % | VYM % |
|---|---|---|
| Financials | 18% | 22% |
| Industrials | 18% | 10% |
| Technology | 15% | 8% |
| Healthcare | 12% | 14% |
| Consumer Staples | 11% | 13% |
| Energy | 7% | 8% |
SCHD Overweights: Industrials, Tech
VYM Overweights: Financials, Healthcare, Staples
Why It Matters:
SCHD has historically benefited from its tech and industrials exposure—sectors that combine dividend growth with capital gains. VYM leans more defensive with broader diversification.
4. Performance Comparison
| Time Period | SCHD | VYM |
|---|---|---|
| 1-Year (2024) | +14.2% | +11.0% |
| 3-Year Annualized | +9.5% | +7.8% |
| 5-Year Annualized | +10.8% | +8.5% |
| 10-Year Annualized | +11.3% | +9.4% |
Source: Morningstar & ETF provider data as of Q1 2025
Key Insight: SCHD has outperformed VYM over all measured periods due to its focus on higher-quality, growth-oriented dividend stocks.
5. Fund Composition and Top Holdings
SCHD Top 5 Holdings (as of Q1 2025)
| Company | Sector | Weight |
|---|---|---|
| Broadcom | Tech | 4.3% |
| PepsiCo | Staples | 4.1% |
| Texas Instruments | Tech | 4.0% |
| Amgen | Healthcare | 3.9% |
| Cisco Systems | Tech | 3.8% |
VYM Top 5 Holdings (as of Q1 2025)
| Company | Sector | Weight |
|---|---|---|
| JPMorgan Chase | Financials | 3.2% |
| Johnson & Johnson | Healthcare | 3.1% |
| ExxonMobil | Energy | 2.8% |
| Procter & Gamble | Staples | 2.6% |
| Bank of America | Financials | 2.5% |
Takeaway: SCHD’s portfolio is more concentrated with a quality screen. VYM offers broader exposure and more sector diversification.
6. Risk and Volatility
| Metric | SCHD | VYM |
|---|---|---|
| Beta (vs S&P 500) | 0.88 | 0.85 |
| Standard Deviation (5Y) | ~13.2% | ~12.4% |
| Max Drawdown (2020) | -31% | -29% |
Risk Profile: Both funds are less volatile than the S&P 500, with SCHD being slightly more sensitive to market cycles due to its growth tilt.
7. Tax Efficiency
Both SCHD and VYM are tax-efficient ETFs.
Capital gains are rare due to in-kind creation/redemption.
Qualified dividends make them suitable for taxable accounts.
SCHD may be slightly more efficient due to lower turnover and fewer holdings.
8. Which Dividend ETF Is Right for You?
| Use Case | Best Pick |
|---|---|
| Long-term growth + dividends | SCHD |
| Pure high yield income | VYM |
| Simple buy-and-hold taxable investing | SCHD |
| Broad diversification | VYM |
| Dividend reinvestment strategy | Either |
| Paired with bonds or TIPS in retirement | Either, depending on yield priority |
9. How to Combine SCHD and VYM in a Portfolio
Some investors choose to blend both ETFs:
50% SCHD + 50% VYM creates a hybrid strategy combining growth, yield, and diversification.
Add a bond ETF like SCHZ for a balanced portfolio.
Sample Portfolio: Dividend Focused Retirement Portfolio (2025)
| ETF | Allocation |
|---|---|
| SCHD | 30% |
| VYM | 30% |
| SCHZ (Bond) | 30% |
| SCHE (Emerging Markets) | 10% |
10. Alternatives to SCHD and VYM
| ETF | Issuer | Focus |
|---|---|---|
| VIG | Vanguard | Dividend growth, not just yield |
| DVY | iShares | Higher yield, more utilities |
| NOBL | ProShares | S&P 500 Dividend Aristocrats |
If you're more focused on dividend consistency or sector tilts (e.g. utilities or aristocrats), one of these may suit you better.
Final Verdict: SCHD vs VYM in 2025
| Factor | Winner |
|---|---|
| Long-Term Performance | SCHD |
| Diversification | VYM |
| Yield | SCHD (slight edge) |
| Risk/Volatility | VYM (slightly less volatile) |
| Portfolio Simplicity | SCHD |
| Tax Efficiency | Tie |
Bottom Line:
Choose SCHD if you want a focused, quality-first dividend growth strategy with better total return potential.
Choose VYM if you prefer broader exposure to high-yielding U.S. stocks with more sector balance.