SCHD vs. VYM: A Higher Yield Or High Total Return Potential | The Motley Fool

Schwab U.S. Dividend Equity ETF ( SCHD 0.07%) and Vanguard High Dividend Yield ETF ( VYM +0.33%) both target dividend-paying U.S. stocks, but differ in sector tilt, portfolio concentration, and yield. Both SCHD and VYM are popular, low-cost options for investors seeking dividend income from U.S. equities. While they share a focus on high-yielding stocks, their approaches to sector allocation, number of holdings, and recent performance diverge, giving each its own appeal depending on investor priorities. Snapshot (cost & size) Metric VYM SCHD Issuer Vanguard Schwab Expense ratio 0.06% 0.06% 1-yr return (as of 2025-12-16) 9.6% (1.4%) Dividend yield 2.4% 3.8% AUM $68.6 billion $72.8 billion Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months. Both SCHD and VYM are equally affordable at a 0.06% expense ratio. However, SCHD stands out with a higher yield, offering a larger income stream for those focused on dividend payouts. Performance & risk comparison Metric VYM SCHD Max drawdown (5 y) (15.85%) (16.86%) Growth of $1,000 over 5 years $1,573 $1,285 What's inside SCHD tracks the Dow Jones U.S. Dividend 100 Index and holds approximately 100 stocks, with a portfolio concentrated in the energy (20%), consumer staples (18%), and healthcare (16%) sectors. Its top holdings include Merck ( MRK +0.40%), Cisco Systems ( CSCO +1.91%), and Amgen ( AMGN +0.90%). Formed in 2011, SCHD may appeal to investors seeking a more yield-focused approach. In contrast, VYM spreads its assets among over 565 companies, tilting toward financial services (21%), technology (14%), and healthcare (13%). Its largest positions are Broadcom ( AVGO +3.18%), JPMorgan Chase ( JPM +1.34%), and Exxon Mobil ( XOM +0.13%). This broader diversification can help reduce risk, especially given its lower allocation to the more volatile energy sector (8%). For more guidance on ETF investing, check out the full guide at this link . What this means for investors SCHD and VYM are heavyweights among ETFs focused on high-yield dividend stocks. They're the largest two funds focused specifically on higher-yielding dividend stocks by AUM. However, they have distinct approaches. VYM invests broadly across the high-yield sector, holding over 550 companies. It tracks an index (FTSE High Dividend Yield Index) that measures the returns of U.S.-listed companies that pay high-yielding dividends (excluding REITs). It weights these companies based on their market caps. As a result, its top holding, semiconductor giant Broadcom, has an 8.7% weighting in the fund. Given this approach, the fund offers the highest allocation to the largest companies with higher dividend yields. SCHD, on the other hand, tracks an index (Dow Jones U.S. Dividend 100 Index) that screens companies based on a quartet of dividend quality characteristics, including dividend yield and five-year dividend growth rate. This methodology gives a higher allocation to the highest quality dividend stocks (Merck currently leads the way to 4.8%). Given these differences, VYM is best for those seeking broad exposure to higher-yielding dividend stocks with a higher...

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