Dividend Hunters Take Note: Why DIVO Edges SCHD for Risk-Adjusted Income

Investors chasing steady dividend income often face a choice between the Amplify CWP Enhanced Dividend Income ETF (DIVO) and the Schwab U.S. Dividend Equity ETF (SCHD). Both funds deliver dividends, but their approaches to yield, volatility, and growth diverge sharply. Here's why DIVO edges SCHD as the better option for income-focused investors seeking superior risk-adjusted returns.

1. Yield: DIVO's Unmatched Income Machine

DIVO's 4.81% forward dividend yield (as of 2025) crushes SCHD's 2.57% trailing yield, making it a standout choice for investors prioritizing cash flow. The gap isn't minor: at $10,000 invested, DIVO generates roughly $481 annually, versus SCHD's $257.

The advantage stems from DIVO's active management and covered call strategies, which boost income by writing options on holdings. SCHD, by contrast, is a passive fund tracking the Dow Jones U.S. Dividend 100 Index, relying solely on dividends from its holdings. While SCHD's yield has grown steadily (from $0.25 to $0.70 per share since 2015), it can't match DIVO's current payout.

2. Volatility: DIVO's Lower Risk Profile

Income investors often overlook volatility—but it's critical for sustaining cash flow. Here, DIVO wins decisively:
- Volatility Metrics: DIVO's beta of 0.77 means it's 23% less volatile than the broader market, while its standard deviation (2.00%) and rolling monthly volatility (2.32%) are far lower than SCHD's 3.39% and 11.01% standard deviation.
- Drawdowns: DIVO's worst drawdown (-30.04%) since inception was shallower than SCHD's -33.37%, and its recent drawdown (-0.59%) is half SCHD's -3.11%.

These metrics matter. A 3% drawdown on $10,000 erases $300 of principal—a hit income investors can't afford.

3. Growth Trajectories: Comparable Returns, Better Risk Adjustment

While both ETFs have delivered solid long-term growth, DIVO's risk-adjusted performance outshines SCHD:
- Sharpe Ratio: 1.86 vs. SCHD's 1.08. A higher Sharpe ratio means more return per unit of risk.
- Sortino Ratio: 2.72 vs. 1.59. This measures excess return per unit of downside risk—again, DIVO leads.

Even though SCHD's 5-year annualized return (11.3%) matches DIVO's 11.4%, the latter achieves this with half the volatility. For income-focused portfolios, that's a no-brainer trade-off.

4. Fees: SCHD's Edge, But Worth the Trade-Off?

SCHD's rock-bottom 0.06% expense ratio is a selling point—but it's offset by DIVO's superior returns. Over five years, the 0.49% fee difference on $10,000 would cost about $245, versus the $425+ in extra dividend income DIVO provides annually. The math favors DIVO.

When to Choose DIVO Over SCHD

• When you need higher income now: DIVO's 4.8% yield vs. SCHD's 2.6% is a clear choice for retirees or those relying on cash flow.
• When volatility risks your goals: DIVO's lower beta and narrower drawdowns protect capital during market dips.
• When you want active management: Covered calls and selective equity picks give DIVO an edge over SCHD's passive approach.

The Bottom Line

SCHD is a solid, low-cost option for broad dividend exposure, but DIVO is the superior pick for income investors seeking the highest yield with the least risk. Its active strategies, lower volatility, and better risk-adjusted returns make it a standout—even with higher fees.

For portfolios where steady dividends and capital preservation are priorities, DIVO is the clear winner.

Investment Takeaway: Allocate to DIVO if you want to maximize income while minimizing volatility. Reserve SCHD for core portfolio diversification or tax-sensitive accounts where ultra-low fees matter most.