Which Dividend ETF Is Better for Income: Schwab's SCHD or Vanguard's VYM?
Key Points
Schwab U.S. Dividend Equity ETF has outperformed Vanguard High Dividend Yield ETF on a 1-year total return basis, while the Vanguard fund has achieved higher growth over a five-year period.
Vanguard High Dividend Yield ETF offers a lower expense ratio and broader diversification across nearly 600 holdings.
Schwab U.S. Dividend Equity ETF provides a higher trailing dividend yield of 3.1% compared to 2.8% for the Vanguard fund.
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Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD) offers a higher trailing yield and stronger recent returns, while Vanguard High Dividend Yield ETF (NYSEMKT:VYM) provides lower fees and broader diversification.
These two funds are among the most popular choices for investors seeking consistent income from domestic equities. While both target companies with a history of high payouts, they use different screening criteria that result in distinct portfolio behaviors. Total assets under management (AUM) for both funds exceed $100 billion, reflecting their status as core holdings for many dividend-focused investors. By examining their cost structures and sector tilts, investors can determine which strategy better aligns with their long-term objectives.
Snapshot (cost & size)
| Metric | VYM | SCHD |
|---|---|---|
| Issuer | Vanguard | Schwab |
| Share price (as of 9/16/26) | $159.26 | $33.68 |
| Expense ratio | 0.04% | 0.06% |
| 1-yr return (as of 9/18/26) | 16.0% | 27.9% |
| Dividend yield | 2.8% | 3.1% |
| Beta | 0.73 | 0.68 |
| AUM | $100.8 billion | $109.4 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Vanguard fund maintains a slight edge in affordability with its 0.04% expense ratio. However, the Schwab fund offers a higher payout, with a trailing dividend yield that currently sits 0.28 percentage points above its competitor.
Performance & risk comparison
| Metric | VYM | SCHD |
|---|---|---|
| Max drawdown (5 yr) | (15.9%) | (16.8%) |
| Growth of $1,000 over 5 years (total return) | $1,767 | $1,599 |
What's inside
The Schwab U.S. Dividend Equity ETF focuses on quality and sustainability, tracking an index of 102 stocks selected for cash flow to debt, return on equity, and dividend growth rate. Its largest positions include Qualcomm at 4.83%, Texas Instruments at 4.45%, and Coca-Cola at 4.16%. The portfolio is concentrated in healthcare at 21%, consumer defensive at 20.4%, and energy at 14%. This fund was launched in 2011. Schwab U.S. Dividend Equity ETF has paid $1.05 per share over the trailing 12 months, which on its recent ~$33.68 share price works out to a 3.1% yield.
The Vanguard High Dividend Yield ETF provides broader diversification by holding more than 600 stocks across various industries. Its top holdings include Broadcom at 6.9%, JPMorgan Chase at 3.83%, and ExxonMobil at 2.70%. The fund is more heavily weighted toward financial services at 21%, followed by technology and industrials at 17% each. It was launched in 2006. Vanguard High Dividend Yield ETF has paid $4.52 per share over the trailing 12 months, which on its recent ~$159.26 share price works out to a 2.8% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
VYM and SCHD are two of the most popular ETFs for investors looking to build a position in a dividend index fund. They both offer low expense ratios and similar dividend yields, but their one- and five-year performances are a mixed bag. That largely comes down to the indexes they track.
SCHD seeks to track the Dow Jones U.S. Dividend 100 Index, while VYM tracks the FTSE High Dividend Yield Index. This is important for two reasons. First, it results in SCHD holding a much narrower portfolio of just over 100 stocks, compared to VYM's 600-stock portfolio. Second, SCHD screens for both dividend yield and financial quality, which includes dividend growth, while VYM focuses on high yield without a quality screen.
There's no doubt that SCHD's 3.1% dividend yield beats VYM's 2.8%, and it's delivered a much stronger one-year return to boot. Its biggest risk is its concentration, which can lead to larger swings in both directions.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Sarah Sidlow has positions in Schwab U.S. Dividend Equity ETF and Vanguard High Dividend Yield ETF. The Motley Fool has positions in and recommends Broadcom, JPMorgan Chase, Qualcomm, Texas Instruments, and Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.
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