Which dividend ETF is better, VYM or SCHD?

**Bottom-line: For a long-term, “buy-and-build” investor who values both income today and the ability to compound that income over the next decade, SCHD edges out VYM thanks to its higher current yield, faster dividend-growth engine, and nearly 100 % cumulative return over the past 10 years. VYM remains an excellent, lower-volatility alternative if you prize broader diversification and slightly better recent price momentum.**

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### 1. Hard numbers at a glance

| Metric (05-Jun-2025) | SCHD | VYM | Comment |
|---|---|---|---|
| Dividend Yield (TTM) | **3.95 %** | 2.84 % | Income advantage to SCHD |
| Expense Ratio | 0.06 % | 0.06 % | Tie |
| 1-Year Total Return | 0.83 % | **9.29 %** | VYM has ridden the value rally |
| 5-Year Total Return | 45.27 % | **56.18 %** | VYM edge |
| 10-Year Total Return | **99.86 %** | 87.90 % | SCHD edge |
| % below 52-W High | -11.6 % | **-3.9 %** | VYM closer to highs |
| Holdings | ~100 | 1,770 | VYM far more diversified |

> Take-away: SCHD delivers more income **and** has compounded faster over a full decade, while VYM has been the recent performance leader and offers a broader safety net.

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### 2. Why the difference?

1. **Index methodology**
• SCHD tracks the Dow Jones U.S. Dividend 100, screening for 10-year dividend growth, high ROE and FCF, then equal-weights the top 100 names.
• VYM tracks the FTSE High Dividend Yield Index, simply market-cap-weights every U.S. stock whose yield sits above the market average.

2. **Sector tilt**
• SCHD is quality-biased: Information Technology (~22 %), Financials (~20 %), Consumer Staples (~15 %), Health Care (~12 %).
• VYM is value-biased: Financials (~22 %), Health Care (~15 %), Consumer Staples (~12 %), Energy & Industrials each ~9 %, IT only ~8 %.
Result: SCHD captures more MAG7-adjacent growth without sacrificing yield—helpful given your tech focus.

3. **Dividend trajectory**
• SCHD’s dividend per share has grown at roughly 12 – 13 % CAGR since inception, double VYM’s ~6 %.
• Compound math wins: higher growth plus nearly 4 % starting yield drives that superior 10-year total return.

4. **Risk profile**
• VYM’s 1,700+ constituents and heavier exposure to defensive sectors translate into lower tracking error and smaller drawdowns.
• SCHD’s concentration (top 10 ≈ 40 % of assets) adds single-stock risk but also allows winners to matter—much like your existing preference for blue-chip growth names.

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### 3. Which ETF fits *you*?

| Objective | Better Fit | Rationale |
|---|---|---|
| Maximise current cash yield | SCHD (currently higher) | 3.9 % vs 2.8 % |
| Grow dividend faster over 10 yrs | SCHD | Proven double-digit dividend CAGR |
| Broader diversification / lower tracking error | VYM | 1,700+ holdings |
| Near-term price momentum | VYM | Closer to 52-week high |
| Tech exposure while collecting dividends | SCHD | ~22 % IT weight |

Given your long-term horizon, interest in tech-adjacent quality companies, and focus on building an income stream that keeps pace with inflation, **SCHD aligns more closely with your strategy**. You would sacrifice a bit of diversification, but you gain:

• Higher immediate income
• Faster income growth potential
• Exposure to the very “quality-growth” names (e.g., MSFT, AVGO) that fit your MAG7 bias

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### 4. Implementation tips

1. **Blend if uncertain** – A 60 % SCHD / 40 % VYM mix lifts yield to ~3.5 %, keeps growth high, and spreads sector risk.
2. **Reinvest automatically** – Compounding dividends quarterly is the secret sauce for both funds.
3. **Watch concentration** – If you already own a lot of individual tech names, SCHD’s top holdings may overlap; adjust sizing accordingly.
4. **Periodic check-up** – Once a year, compare each fund’s yield-on-cost and keep an eye on any methodology changes (rare but worth noting).

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### 5. Final verdict

For a growth-minded dividend investor with a 10-year runway, **SCHD is the more powerful core holding**, while VYM makes an excellent satellite for added ballast. If you must pick one, choose SCHD; if you can own both, blend them and let time—and disciplined reinvestment—do the heavy lifting.