Which Dividend ETF Is Best for the Long Term: Fidelity's FDVV or Schwab's SCHD?

Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD) and Fidelity High Dividend ETF (NYSEMKT:FDVV) differ in cost, sector exposure, and recent performance, with FDVV showing higher five-year returns but at a higher fee and greater volatility.

Both SCHD and FDVV are designed to provide equity income, but their strategies diverge. SCHD tracks a rules-based index focused on quality U.S. dividend payers, while FDVV tilts toward higher-yielding stocks with a technology and financials bias. This comparison highlights their costs, risks, performance, and portfolio differences to help readers determine which ETF best fits their needs.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The one-year return represents total return over the trailing 12 months.

FDVV charges a higher fee than SCHD, making SCHD the more affordable choice. SCHD also offers a higher dividend yield, which could appeal to those prioritizing income.

Performance & risk comparison

What's inside

FDVV focuses on delivering a high dividend yield, with a notable tilt toward technology (26%), financial services (18%), and consumer cyclical (15%) sectors across its 119 holdings. Its largest positions include Nvidia, Apple, and Microsoft. The fund has a 10-year track record and currently has no unusual features or quirks.

In contrast, SCHD maintains a heavier allocation to consumer defensive, healthcare, and energy sectors, giving it a different risk and income profile. Its top holdings -- Texas Instruments, UnitedHealth, and Merck -- reflect this more defensive approach, which may help explain its lower volatility and higher yield compared to FDVV.

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What this means for investors

I want to say, right up front, that both of these dividend ETFs are excellent choices for investors. Since debuting on the markets, SCHD and FDVV have delivered annualized total returns of 13.1% and 13.2%, while suffering relatively minimal drawdowns. Both ETFs have very reasonable expense ratios, dividend yields of 3% or higher, and hold over 100 stocks, providing solid diversification and stability.

That said, if I were forced to pick between the two ETFs, I would lean ever so slightly toward SCHD, thanks to the fact that it doesn’t rely as heavily upon the technology sector. This decision is purely a personal preference for me, as I already have significant exposure to the mega-cap tech names and don’t want to double-dip in this area. For another investor, that might be the selling point for buying FDVV instead -- especially as these mega-cap tech names have helped the ETF vastly outperform over the last five years.

This juxtaposition highlights that while both ETFs are great options for U.S. dividend stocks, investors need to decide which one best fits their portfolio. Ultimately, I’m going with SCHD thanks to its higher dividend yield, slightly lower expense ratio, smaller five-year drawdown, and its focus on the consumer defensive, healthcare, and energy sectors -- which I don’t have as much exposure to. If you’re interested in the big tech names, FDVV is most likely the better fit for you. If you prioritize stability and slightly better efficiency, SCHD may be the ticket.

Josh Kohn-Lindquist has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Merck, Microsoft, Nvidia, and Texas Instruments. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.