SCHD vs VYM: Best Dividend ETF for 2026 — Complete Comparison
SCHD ETF vs VYM: compare the best dividend ETFs by yield, growth, overlap and total returns. Find the top high dividend ETF for income investing in 2026.
Quick Summary
SCHD and VYM are the two most popular dividend ETFs, but they take different approaches. SCHD focuses on quality dividend growers with stricter screening, while VYM casts a wider net across high-yield stocks. SCHD has outperformed with better total returns, while VYM offers broader diversification with more holdings.
Compare live at /schd-vs-vym
What Are SCHD and VYM?
SCHD — Schwab U.S. Dividend Equity ETF
- Tracks: Dow Jones U.S. Dividend 100 Index
- Holdings: ~100 stocks
- Expense Ratio: 0.06%
- Dividend Yield: ~3.5%
- Launched: October 2011
- Assets: $60+ billion
- Strategy: Quality dividend growers (10+ years of consecutive dividends)
VYM — Vanguard High Dividend Yield ETF
- Tracks: FTSE High Dividend Yield Index
- Holdings: ~450 stocks
- Expense Ratio: 0.06%
- Dividend Yield: ~2.8%
- Launched: November 2006
- Assets: $50+ billion
- Strategy: Broad high dividend yield exposure
Key Differences
| Feature | SCHD | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 0.06% | 0.06% | Tie |
| Dividend Yield | ~3.5% | ~2.8% | SCHD |
| Number of Holdings | ~100 | ~450 | VYM (diversification) |
| Dividend Growth (5yr) | 12% CAGR | 7% CAGR | SCHD |
| Total Return (5yr) | ~12% annual | ~10% annual | SCHD |
| Sector Concentration | Higher | Lower | VYM |
| Screening Criteria | Strict quality | Yield-based | SCHD (quality) |
Holdings Overlap Analysis
SCHD and VYM have approximately 38% overlap — less than most people expect.
Why so low? Different methodologies:
- SCHD screens for quality metrics: cash flow to debt, ROE, dividend yield, and 5-year dividend growth rate
- VYM simply selects stocks with above-average dividend yields
This means they select very different stocks despite both targeting dividends.
Top Shared Holdings:
| Company | SCHD Weight | VYM Weight |
|---|---|---|
| Home Depot (HD) | 4.2% | 2.1% |
| Coca-Cola (KO) | 4.1% | 1.8% |
| PepsiCo (PEP) | 4.0% | 1.5% |
| Abbvie (ABBV) | 4.1% | 2.3% |
| Broadcom (AVGO) | 4.5% | 2.8% |
See detailed overlap analysis at /schd-vs-vym
Dividend Comparison
Current Yield
- SCHD: ~3.5%
- VYM: ~2.8%
SCHD pays more per dollar invested.
Dividend Growth Rate
This is where SCHD really shines:
| Period | SCHD Growth | VYM Growth |
|---|---|---|
| 1 Year | 8.5% | 4.2% |
| 3 Year CAGR | 10.2% | 6.1% |
| 5 Year CAGR | 12.1% | 7.0% |
Why this matters: Faster dividend growth means your income accelerates over time. Starting with $100K:
- SCHD at 3.5% yield + 12% growth: $12,200/yr income after 10 years
- VYM at 2.8% yield + 7% growth: $5,500/yr income after 10 years
SCHD's income more than doubles VYM's over a decade.
Sector Exposure
| Sector | SCHD | VYM |
|---|---|---|
| Financials | 18% | 22% |
| Healthcare | 15% | 14% |
| Industrials | 14% | 10% |
| Consumer Staples | 13% | 12% |
| Technology | 12% | 8% |
| Energy | 8% | 9% |
| Utilities | 0% | 7% |
| Real Estate | 0% | 4% |
Key differences:
- SCHD skips Utilities and REITs entirely — these are traditional high-yield but low-growth sectors
- VYM is more balanced across all sectors
- SCHD is more tech-heavy for a dividend fund, reflecting quality growth picks
Explore sector exposure with our Sector X-Ray tool.
Performance Comparison
Total Return (Price + Dividends)
| Period | SCHD | VYM | Winner |
|---|---|---|---|
| 1 Year | +18.2% | +15.1% | SCHD |
| 3 Year (annualized) | +10.5% | +8.2% | SCHD |
| 5 Year (annualized) | +12.3% | +10.1% | SCHD |
SCHD has consistently outperformed on total return.
Risk Metrics
| Metric | SCHD | VYM |
|---|---|---|
| Volatility (5yr) | 14.8% | 14.2% |
| Max Drawdown | -18.5% | -17.8% |
| Sharpe Ratio | 0.72 | 0.63 |
| Beta | 0.82 | 0.78 |
VYM is slightly less volatile, but SCHD's higher Sharpe Ratio means better risk-adjusted returns.
Which Should You Choose?
Choose SCHD if:
- You want higher current yield (3.5% vs 2.8%)
- Dividend growth rate matters to you
- You prefer concentrated quality picks
- You want better total returns historically
- You're building an income snowball
Choose VYM if:
- You want broader diversification (450 vs 100 stocks)
- You want exposure to utilities and REITs
- Lower concentration risk is important
- You're more conservative
Can you hold both?
With only 38% overlap, holding both actually provides meaningful diversification. A 60% SCHD / 40% VYM split gives you SCHD's quality screen with VYM's breadth.
Common Questions
Is SCHD better than VYM? For most dividend investors, yes. SCHD has higher yield, faster dividend growth, and better total returns. But VYM's broader diversification can be valuable for conservative portfolios.
Which has better tax efficiency? Both are similar. Neither has distributed significant capital gains recently. Qualified dividend rates apply to most distributions from both.
Can I use these in a Roth IRA? Absolutely. Dividend ETFs in a Roth IRA grow tax-free. SCHD's higher growth rate makes it especially powerful in a Roth.
What about JEPI or JEPQ as alternatives? JEPI/JEPQ use covered call strategies for higher current income (~8-10%) but sacrifice upside growth. They're income NOW vs income LATER. For most long-term investors, SCHD/VYM are better.
How much overlap do SCHD and VYM have? About 38%. Less than expected because they use different stock selection criteria.
Conclusion
SCHD is the better choice for most dividend investors. Higher yield, faster dividend growth, and superior total returns make it the gold standard for dividend ETFs.
VYM is better if you prioritize maximum diversification and want utility/REIT exposure.
Best approach: 60-70% SCHD + 30-40% VYM for a blended dividend portfolio that captures SCHD's quality with VYM's breadth.
Compare SCHD vs VYM with live data at /schd-vs-vym
Use the Dividend Optimizer to analyze your full dividend portfolio.
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