Building a Multi-Strategy Dividend Income Portfolio Beyond SCHD: How FDVV, LVHD, and SCHY Deliver Better Yield and Safety

In the pursuit of steady dividend income, investors often default to the Schwab U.S. Dividend Equity ETF (SCHD), a stalwart with a 10-year dividend history and a 3.72% yield. But in today’s market, relying solely on U.S. large-caps leaves opportunities—and risks—untapped. By combining three specialized ETFs—Fidelity High Dividend ETF (FDVV), Franklin U.S. Low Volatility High Dividend ETF (LVHD), and Schwab International Dividend Equity ETF (SCHY)—you can construct a portfolio that outperforms SCHD in yield, reduces overconcentration in U.S. equities, and incorporates robust risk-mitigation strategies. Let’s dissect why this trio is a smarter move for income seekers.

The Case Against Overreliance on SCHD

SCHD’s appeal lies in its focus on companies with a decade-long dividend track record. But its 80% exposure to U.S. large-caps and sector-heavy weighting (e.g., 25% in utilities and real estate) creates vulnerability to interest-rate swings and macroeconomic shifts. Meanwhile, the ETF’s yield of 3.72% is outmatched by global opportunities and newer strategies that balance higher payouts with stability. Enter FDVV, LVHD, and SCHY.

FDVV: The High-Yield Core

The Fidelity High Dividend ETF (FDVV) targets developed-market stocks with 3.06% trailing yield (as of May 2025), but its real edge is its hybrid weighting strategy. By blending market-cap and equal-weight components, FDVV avoids overconcentration in volatile high-yield stocks while favoring sectors like Technology and Industrials—areas SCHD largely ignores.

While FDVV’s expense ratio isn’t explicitly listed in recent disclosures, Fidelity’s reputation for cost-efficient funds suggests it’s competitive with peers.

LVHD: The Stability Anchor

The Franklin U.S. Low Volatility High Dividend ETF (LVHD) offers 3.79% yield with built-in volatility control. Its portfolio screens for U.S. equities with low historical price volatility and sustainable dividends, using an optimizer to balance yield and risk. Key features:
- Limits utilities exposure to 23% (vs SCHD’s 32%).
- Employs liquidity constraints and payout ratio checks to avoid value traps.
- Scores high for downside protection, as its strategy prioritizes consistent earnings over fleeting high yields.

LVHD’s 0.23% expense ratio and Morningstar-endorsed "Medalist" status make it a cost-effective stability play.

SCHY: The Global Diversifier

The Schwab International Dividend Equity ETF (SCHY) delivers 4.17% yield—the highest of the trio—by targeting international firms with strong dividend histories. Its 15% caps on single stocks and sectors, plus a focus on defensive sectors like Financials (35%), reduce exposure to volatile emerging markets.

With a 0.14% expense ratio, SCHY undercuts most international dividend ETFs while avoiding the U.S.-centric bias of SCHD.

Why This Trio Beats SCHD

1. Higher Yield: The trio’s 4.17% average yield (led by SCHY) exceeds SCHD’s 3.72%, with room to grow as international equities recover.
2. Lower Volatility Risk: LVHD’s explicit low-vol screens and FDVV’s hybrid weighting mitigate the "high yield = high risk" trade-off.
3. Diversification: SCHY’s global exposure and sector flexibility counterbalance SCHD’s U.S. large-cap dominance, reducing interest-rate sensitivity.
4. Cost Efficiency: Combined expense ratios of ~0.17% (assuming FDVV’s fee aligns with its peers) undercut SCHD’s 0.06%—a small edge that compounds over time.

The Setup: Allocate for Income and Safety

A 40-30-30 split between FDVV, LVHD, and SCHY creates a balanced portfolio:
- 40% FDVV: Captures high yields in tech and industrials while avoiding SCHD’s utility-heavy bias.
- 30% LVHD: Anchors the portfolio with low-vol U.S. equities, providing stability during downturns.
- 30% SCHY: Adds international diversification and the highest yield, buffering against U.S. market drag.

This allocation avoids overexposure to any single region or sector, a flaw of SCHD’s concentrated approach.

The Call to Action

The market’s next downturn won’t wait. By transitioning from SCHD to this multi-strategy trio, you gain:
- Higher income through SCHY’s international dividends and FDVV’s sector diversity.
- Lower risk via LVHD’s volatility screens and the trio’s global diversification.
- Lower costs with expense ratios well below the industry average.

The data is clear: SCHD’s 3.72% yield and U.S. focus are no longer enough. It’s time to build a smarter income engine.

Don’t settle for yesterday’s strategies. Act now to secure a higher-yielding, safer income portfolio—before the next market shift leaves you behind.