

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.
1. Hard numbers at a glance
Metric (05-Jun-2025) | SCHD | VYM | Comment |
---|---|---|---|
Dividend Yield (TTM) | 3.95 % | 2.84 % | Income advantage to SCHD 1 |
Expense Ratio | 0.06 % | 0.06 % | Tie 1 |
1-Year Total Return | 0.83 % | 9.29 % | VYM has ridden the value rally 1 |
5-Year Total Return | 45.27 % | 56.18 % | VYM edge 1 |
10-Year Total Return | 99.86 % | 87.90 % | SCHD edge 2 |
% below 52-W High | -11.6 % | -3.9 % | VYM closer to highs 34 |
Holdings | ~100 | 1,770 5 | 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.
2. Why the difference?
-
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. -
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. -
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. -
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.
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
4. Implementation tips
- Blend if uncertain – A 60 % SCHD / 40 % VYM mix lifts yield to ~3.5 %, keeps growth high, and spreads sector risk.
- Reinvest automatically – Compounding dividends quarterly is the secret sauce for both funds.
- Watch concentration – If you already own a lot of individual tech names, SCHD’s top holdings may overlap; adjust sizing accordingly.
- 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).
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.
