Dividend ETF Matchup: SCHD Offers Higher Yield While VIG Leads in Growth
Key Points
SCHD charges a slightly higher fee but offers a yield more than double that of VIG
VIG’s recent returns outpace SCHD, but SCHD has experienced shallower drawdowns over five years
VIG tilts toward technology and financials, while SCHD focuses on energy, consumer defensive, and healthcare
- These 10 stocks could mint the next wave of millionaires ›
Vanguard Dividend Appreciation ETF (VIG) (NYSEMKT:VIG) and Schwab U.S. Dividend Equity ETF (SCHD) (NYSEMKT:SCHD) differ most in yield, sector exposure, and recent performance, with SCHD offering a higher payout but lagging in total return as of Dec. 16, 2025.
Both VIG and SCHD target U.S. companies with strong dividend credentials, but their approaches and outcomes diverge. VIG tracks an index of large-cap stocks with consistent dividend growth.
Snapshot (Cost & Size)
| Metric | VIG | SCHD |
|---|---|---|
| Issuer | Vanguard | Schwab |
| Expense ratio | 0.05% | 0.06% |
| 1-yr return (as of Dec. 16, 2025) | 8.8% | (1.4%) |
| Dividend yield | 1.6% | 3.8% |
| Beta | 0.85 | 0.77 |
| AUM | $101.8 billion | $71.4 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
Both ETFs are among the most affordable in their space, with SCHD charging just 0.01 percentage points more in annual fees. SCHD’s dividend yield is more than double that of VIG, which may appeal to those seeking higher current income.
Performance & Risk Comparison
| Metric | VIG | SCHD |
|---|---|---|
| Max drawdown (5 y) | (20.39%) | (16.86%) |
| Growth of $1,000 over 5 years | $1,565 | $1,285 |
What's Inside
SCHD focuses on 100 U.S. stocks with an emphasis on dividend sustainability and quality, resulting in sector tilts toward energy (20%), consumer defensive (18%), and healthcare (16%). Its largest holdings are Merck & Co (NYSE:MRK), Cisco Systems (NASDAQ:CSCO), and Amgen (NASDAQ:AMGN). With more than 14 years of history, SCHD’s compact portfolio may amplify its sector biases compared to broader funds.
VIG, in contrast, holds 341 companies and leans heavily into technology (28%), financial services (22%), and healthcare (15%). Its top positions—Broadcom (NASDAQ:AVGO), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL)—reflect a preference for companies with a track record of dividend growth over simple yield. This broader sector spread gives VIG a different risk and return profile than SCHD.
What This Means For Investors
The Vanguard Dividend Appreciation ETF (VIG) (NYSEMKT:VIG) and Schwab U.S. Dividend Equity ETF (SCHD) (NYSEMKT:SCHD) are both dividend-oriented ETFs, but they go about delivering value to investors in different ways. Here's what average investors need to know about these two ETFs.
First off, SCHD is more of a traditional, income-oriented ETF. SCHD boasts a significant dividend yield of 3.8%, meaning that a $10,000 investment in the fund should deliver about $380 per year in annual dividend income. VIG, on the other hand, has a lower dividend yield of 1.6%, equating to about $160 in annual dividend income for an investor with $10,000 in the fund.
Of course, there are trade offs for that big dividend yield. SCHD has many top holdings that pay large dividends but haven't produced rapid growth -- companies like Merck, Amgen, and Verizon, among others.
By contrast, VIG has top holdings like Apple, Microsoft, and Broadcom. These companies that pay increasing -- but modest -- dividends and tend to also deliver value to shareholders through massive buyback programs that boost their stock price.
Both approaches can be effective. VIG has delivered a total return of 70.6% over the last five years, while SCHD has produced a total return of 54%.
To sum up, both ETFs offer a successful approach for dividend-focused investors. Strictly income-oriented investors are likely a better match for SCHD, given its higher dividend yield. Meanwhile, investors who are seeking a blend of growth, value, and dividend-derived income might select VIG for its mix of high-growth names that deliver modest income to investors.
Glossary
ETF: Exchange-traded fund; a basket of securities traded on an exchange like a stock.
Dividend yield: Annual dividends paid by an investment divided by its current price, expressed as a percentage.
Expense ratio: Annual fund operating expenses as a percentage of average assets under management.
Drawdown: The peak-to-trough decline in value of an investment, usually shown as a percentage.
Beta: A measure of an investment's volatility compared to the overall market, typically the S&P 500.
AUM: Assets under management; the total market value of assets a fund manages.
Sector tilt: When a fund invests more heavily in certain industry sectors than others or than a benchmark.
Dividend growth: The consistent increase in dividend payments by a company over time.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Max drawdown: The largest observed loss from a fund's peak value to its lowest point over a specific period.
Portfolio: The collection of assets, such as stocks or bonds, held by a fund or investor.
For more guidance on ETF investing, check out the full guide at this link.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 972%* — a market-crushing outperformance compared to 193% for the S&P 500.
They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.
See the stocks »
*Stock Advisor returns as of December 20, 2025.
Jake Lerch has positions in Merck. The Motley Fool has positions in and recommends Amgen, Apple, Cisco Systems, Merck, Microsoft, and Vanguard Dividend Appreciation ETF. The Motley Fool recommends Broadcom and Verizon Communications and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Recommended Articles
