Better Dividend ETF: Schwab's SCHD vs. Vanguard's VIG
Key Points
SCHD offers a higher dividend yield and slightly less volatility than VIG.
VIG has outperformed SCHD over the past five years in total growth, but both delivered near-identical one-year returns.
SCHD leans into consumer defensive and energy stocks, while VIG tilts to technology and financials.
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The Vanguard Dividend Appreciation ETF (NYSEMKT:VIG) and Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD) both target U.S. dividend stocks, but VIG leans more into technology and financials with a lower yield, while SCHD tilts toward consumer defensive and energy with a higher payout.
Both VIG and SCHD are popular, low-cost exchange-traded funds focused on U.S. companies with strong dividend profiles. This comparison highlights their differences in cost, yield, performance, risk, and sector tilts to help investors decide which fund may better fit their portfolio preferences.
Snapshot (cost & size)
| Metric | VIG | SCHD |
|---|---|---|
| Issuer | Vanguard | Schwab |
| Expense ratio | 0.04% | 0.06% |
| 1-yr return (as of 2026-04-20) | 28.2% | 28.8% |
| Dividend yield | 1.5% | 3.4% |
| Beta | 0.83 | 0.67 |
| AUM | $117.1 billion | $87.5 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
VIG is slightly more affordable on expenses, but SCHD delivers a much higher dividend yield, which may appeal to income-focused investors.
Performance & risk comparison
| Metric | VIG | SCHD |
|---|---|---|
| Max drawdown (5 y) | -20.39% | -16.84% |
| Growth of $1,000 over 5 years | $1,627 | $1,478 |
What's inside
SCHD holds 104 stocks with a focus on companies in the consumer defensive (20%), healthcare (19%), and energy (17%) sectors. Its largest positions as of the latest data are Texas Instruments (NASDAQ:TXN), United Health Group (NYSE:UNH), and Merck (NYSE:MRK). The fund is over 14 years old and follows the Dow Jones U.S. Dividend 100 Index, aiming for steady income from established dividend payers.
In contrast, VIG tracks a broader basket of 338 stocks, emphasizing technology (23%), financial services (20%), and healthcare (18%). Its top holdings include Broadcom (NASDAQ:AVGO), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT). VIG’s approach targets companies with a consistent record of growing dividends, which may lead to a slightly different risk-return profile than SCHD.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
For investors seeking an exchange-traded fund with robust dividends, the Schwab U.S. Dividend Equity ETF (SCHD) may seem like a no-brainer over the Vanguard Dividend Appreciation ETF (VIG), given its much higher dividend yield. Yet a deeper dive into each paints a more subtle picture of their differences, and which might be the best ETF for you.
SCHD boasts a larger dividend yield since it targets companies with strong financials that enable consistent payouts. Its focus on less volatile sectors, such as consumer defensive, leads to its lower beta and max drawdown. However, this also can contribute to lower capital appreciation over the long run, as these industries are known for slow growth.
VIG has a a lower dividend yield because the technology sector comprises nearly a quarter of its holdings, and tech is not known for generous payouts. But tech stocks are famous for high growth, and that can deliver stronger total returns over time. For example, VIG’s top holding, Broadcom, experienced more than 120% growth over the last 12 months through April 21. Moreover, VIG seeks stocks with a history of increasing dividend payouts, which also contributes to its total return.
When deciding between SCHD and VIG, the choice comes down to your preference for the former’s stability and higher dividend yield or the latter’s opportunity for outsized growth over time.
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Robert Izquierdo has positions in Apple, Broadcom, Microsoft, Texas Instruments, and UnitedHealth Group. The Motley Fool has positions in and recommends Apple, Broadcom, Merck, Microsoft, Texas Instruments, and Vanguard Dividend Appreciation ETF. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.
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