SCHD vs VYM: Best Dividend ETF for Income Investors?

If you have ever compared dividend ETFs, you have probably run into the SCHD vs VYM debate. Both funds pay solid dividends. Both own hundreds of American companies. But they are built very differently, and the right choice depends entirely on what you want from your money.

This guide breaks down everything about the SCHD vs VYM decision: yield, growth, total returns, holdings, sectors, costs, and who each fund is really for. By the end, you will know exactly which one fits your goals, or whether you should own both.

Disclosure: This post contains general information only and is not financial advice. Always do your own research before investing.

What Are SCHD and VYM?

Before we get into the SCHD vs VYM numbers, let us cover the basics.

SCHD stands for Schwab U.S. Dividend Equity ETF. It launched in 2011. It is managed by Charles Schwab. SCHD does not just pick high-yield stocks. It uses a quality filter. A company has to pass a test for things like dividend history, cash flow, and return on equity before it gets in. The result is a smaller, more selective fund with around 100 stocks.

VYM stands for Vanguard High Dividend Yield ETF. It also launched in 2006, making it older than SCHD. VYM tracks the FTSE High Dividend Yield Index. It simply buys companies that are expected to pay above-average dividends. No quality filter. No cash flow test. Just: does this company pay a big dividend? If yes, it is in. VYM holds around 550 stocks right now.

Same goal, very different methods. That SCHD vs VYM difference matters more than you might think when you are choosing where to park your dividend money.

SCHD vs VYM: Side-by-Side Comparison

Here is a snapshot of both funds. Data as of mid-2026. Always check current numbers before investing.

Feature	SCHD	VYM
Full Name	Schwab U.S. Dividend Equity ETF	Vanguard High Dividend Yield ETF
Launch Date	October 2011	November 2006
Expense Ratio	0.06%	0.04%
Number of Holdings	~100	~550
Dividend Yield	~3.3%	~2.3%
Dividend Frequency	Quarterly	Quarterly
AUM (Assets)	~$95.7 billion	~$96.2 billion
YTD Return (2026)	~20.6%	~13.3%
3-Year Return	~14.9%	~18.5%
Beta (5-Year)	0.58	0.69
Dividend Type	Qualified dividends	Qualified dividends

Both funds pay qualified dividends. That means they get the lower tax rate, not ordinary income tax. This is a big advantage over covered call ETFs like JEPI or JEPQ. If you want to understand that comparison, check out our full JEPI vs JEPQ breakdown.

Yield: SCHD Wins on Income

SCHD currently yields around 3.3%. VYM yields around 2.3%. That is a full percentage point difference. On $100,000 invested, that means SCHD pays you roughly $3,300 per year. VYM pays roughly $2,300 per year. That $1,000 gap adds up fast over 10 or 20 years.

But here is the thing. Yield alone does not tell the full story. A higher yield can sometimes mean the stock price has fallen, not that the company is paying more. That is called a “yield trap.” SCHD avoids many yield traps because of its quality screening process.

VYM’s lower yield actually reflects the fact that it owns more tech and growth-adjacent companies that pay smaller dividends. Broadcom, for example, is VYM’s top holding and pays a lower yield than traditional dividend stocks.

Dividend Growth: Both Are Solid, SCHD Leads

Total yield matters. But dividend growth is what really builds wealth over time.

SCHD has grown its dividend at roughly 10-12% per year over the past decade. That means your income roughly doubles every 6-7 years just from dividend growth alone, even without reinvesting. This is one reason SCHD has become the favorite dividend ETF on forums like r/dividends.

VYM has also grown its dividend consistently, but at a slower pace, closer to 5-7% per year on average. That is still solid. But SCHD’s faster dividend growth rate means a share of SCHD bought today will likely pay you more income in year 10 than a share of VYM.

Dividend growth investors care a lot about this. If you plan to hold for 15 or 20 years, the fund with faster growing dividends will eventually pay you more income per share even if it starts with a similar or lower yield.

Want to model exactly how this plays out with your specific numbers? Use our SCHD Dividend Calculator to see projected income over time.

Total Returns: The Part Most People Get Wrong

Here is where the SCHD vs VYM numbers get interesting. And a little surprising.

Many people assume SCHD crushes VYM in total return because SCHD has the better reputation on social media. But the data tells a more complicated story.

Over the past 3 years, VYM has outperformed SCHD in total return (price + dividends combined). VYM returned roughly 18.5% over 3 years. SCHD returned roughly 14.9%. That gap is real and worth taking seriously.

Why? Because VYM owns more of the companies that did well recently. Broadcom is VYM’s largest holding and it is a massive winner. SCHD avoids very large tech positions because of its quality and concentration rules.

But zoom out further. Over 10 years, SCHD has often had the edge. The story changes depending on which 3-year or 5-year window you look at. The lesson: do not pick a fund based on recent returns alone.

Both funds also have much lower volatility than the overall market. SCHD’s 5-year beta is 0.58. VYM’s is 0.69. A beta below 1.0 means the fund moves less than the market in both directions. During a crash, these funds typically fall less. During a rally, they typically gain less. That is the dividend ETF trade-off.

If you are curious how dividend reinvesting changes the return picture over time, try our DRIP Calculator to model different scenarios.

Holdings: 100 vs 550 Stocks

SCHD holds about 100 stocks. VYM holds about 550 stocks. This is one of the biggest practical differences between the two funds.

SCHD’s top holdings include UnitedHealth Group, Merck, Home Depot, Abbott Labs, Procter and Gamble, Amgen, Coca-Cola, PepsiCo, Texas Instruments, and Chevron. Heavy on healthcare and consumer staples. Not much tech at all.

VYM’s top holdings include Broadcom, JPMorgan Chase, ExxonMobil, Johnson and Johnson, Cisco, Caterpillar, AbbVie, Oracle, UnitedHealth, and Chevron. More diversified across sectors. More tech and financials mixed in.

Because SCHD holds only 100 stocks, each stock has more impact. If UnitedHealth has a bad quarter, you will feel it in SCHD. With VYM’s 550 stocks, no single company can move the needle much.

That concentration is a feature for some investors, not a bug. Fewer, higher-quality stocks can outperform a bloated index. But it also means more individual company risk.

Sector Weightings: Very Different Bets

The sectors each fund leans on tell you a lot about what you are really buying.

SCHD is heavily weighted toward:

• Financials (~20-22%)
• Healthcare (~15-18%)
• Consumer Staples (~14-16%)
• Industrials (~13-15%)
• Energy (~7-9%)

VYM is weighted differently:

• Financials (~22-25%)
• Healthcare (~12-15%)
• Technology (~14-16%)
• Consumer Staples (~10-12%)
• Industrials (~10-12%)

The key difference is technology. VYM has meaningful tech exposure. SCHD has almost none. This explains why VYM does better in tech bull markets and SCHD does better when tech corrects.

If you already own a tech-heavy fund like VOO or QQQ, SCHD gives you better diversification. If you want dividend income with some tech exposure baked in, VYM fits better. To understand how VYM and SCHD stack up against a pure index fund, see our SPY vs VOO comparison for context on how market-cap index funds work.

Expense Ratios: Both Are Dirt Cheap

VYM charges 0.04% per year. SCHD charges 0.06% per year. The difference is $2 per year on a $100,000 investment. Do not pick your fund based on this. Both are among the cheapest ETFs in existence.

For comparison, the average actively managed mutual fund charges around 0.5-1.0% per year. VYM and SCHD both charge almost nothing. This is good news. Low fees mean more of your returns stay in your pocket over time.

Tax Efficiency: Both Are Good, But Context Matters

Both SCHD and VYM pay qualified dividends. This is a huge advantage. Qualified dividends are taxed at 0%, 15%, or 20% depending on your income, not at your regular income tax rate. Most investors pay 15% on qualified dividends.

Compare that to covered call ETFs like JEPI, which pay ordinary income distributions taxed at your full income rate. On the same $100,000 investment, the difference can be hundreds of dollars per year just in taxes.

You can hold SCHD and VYM in a taxable brokerage account and not feel too much tax pain. That said, holding them in a Roth IRA or traditional IRA lets those dividends compound without any annual tax drag. If you have IRA space available, use it.

What Does r/dividends Think?

If you spend time in the r/dividends community, you will quickly notice SCHD is the clear fan favorite. It comes up in almost every portfolio discussion. People love the dividend growth rate and the quality screening process.

VYM gets respect too, but it is often seen as the “safe” or “boring” choice. Fewer opinions about VYM on the internet means fewer fervent fans. But boring is not bad when it comes to investing.

The main debates in r/dividends around the SCHD vs VYM question tend to come down to a few things:

• Concentration vs diversification: SCHD’s 100 stocks feels more focused. VYM’s 550 feels more diversified. Both camps have fans.
• Tech exposure: Some investors want zero tech in their dividend fund (they get tech elsewhere). Others like having a little tech through VYM.
• Dividend growth vs current yield: Long-term buy-and-hold investors tend to prefer SCHD’s faster dividend growth. Income-now investors sometimes prefer VYM’s broader base.
• Which one holds up in a crash: SCHD tends to hold up better in sharp selloffs because it avoids high-beta tech. VYM falls a bit more but recovers with tech rebounds.

Both camps have valid points. The right answer depends on your personal situation, not on which Reddit thread was louder.

Who Should Choose SCHD?

SCHD is probably the better fit if:

• You care more about growing income than current yield
• You want quality companies, not just high yielders
• You already have tech exposure through other funds and want something different
• You are building a portfolio for 10 or more years from now
• You like a focused, concentrated portfolio of blue-chip dividend payers
• You are in a market phase where defensive sectors are outperforming tech

SCHD is the dividend growth investor’s go-to fund. It is built to reward patience. The longer you hold it, the better it tends to look relative to other income options.

Who Should Choose VYM?

VYM makes more sense if:

• You want very broad diversification across hundreds of dividend payers
• You want some tech exposure without going full growth
• You prefer Vanguard’s fund management style and philosophy
• You want lower volatility and a broader net
• You are newer to dividend investing and want a more forgiving, diversified fund
• You want to own a fund that mirrors a simple high-yield index strategy

VYM is the “just buy everything that pays a dividend” approach. It is not exciting. But it is cheap, diversified, and has a long track record going back to 2006. That history through multiple market cycles counts for a lot.

Can You Hold Both SCHD and VYM?

Yes. And many investors do.

SCHD and VYM have very low overlap in their top holdings. SCHD is concentrated in quality filtered companies. VYM casts a wider net. Owning both gives you the dividend growth engine of SCHD plus the broader diversification of VYM.

A simple starting point might be 60% SCHD and 40% VYM. Or equal weight. Some investors pair one of them with a growth index like VOO or VTI to balance income with long-term capital appreciation. There is no single right answer. It depends on your age, income needs, and how much you want your dividends to grow versus how much you want right now.

One important note: both of these funds cap your upside during raging bull markets. If tech stocks surge 40% in a year, SCHD and VYM will not keep up. They are income and stability tools, not growth machines. Do not make them your whole portfolio if you still need your investments to grow significantly.

SCHD vs VYM: The Verdict

Here is the simple version of the SCHD vs VYM decision:

• Choose SCHD if you want faster dividend growth, higher current yield, and a quality-screened portfolio of around 100 solid companies.
• Choose VYM if you want broader diversification, lower volatility, some tech exposure, and a fund with a longer track record.
• Choose both if you want the benefits of each and can tolerate a little overlap.

Neither fund is wrong. They are both excellent tools for dividend investors. The difference is in what you optimize for. SCHD optimizes for income growth. VYM optimizes for breadth and simplicity.

Most long-term dividend investors end up slightly preferring SCHD in the SCHD vs VYM matchup for its combination of yield, quality, and dividend growth. But VYM is a legitimate choice for investors who value diversification and a longer history.

For more on dividend investing methodology, Morningstar’s ETF research is worth bookmarking: Morningstar’s SCHD analysis gives an independent take on how the fund is constructed and why it has earned high marks from analysts.

SCHD vs VYM: Frequently Asked Questions

Is SCHD better than VYM long term?

For long-term investors focused on growing income, SCHD has historically edged out VYM thanks to faster dividend growth (around 10-12% per year vs 5-7% for VYM). But in recent 3-year windows, VYM has had the better total return because of its tech exposure through holdings like Broadcom. The SCHD vs VYM long-term verdict depends a lot on which 10-year window you examine and whether tech continues to outperform.

Can you hold SCHD and VYM together?

Yes, many investors hold both in a SCHD vs VYM split. The two funds have low overlap in their holdings. SCHD brings quality screening and high dividend growth. VYM brings broader diversification and some tech exposure. A 60/40 or 50/50 SCHD vs VYM split is common among r/dividends investors who want the best of both approaches.

Which pays a higher dividend, SCHD or VYM?

SCHD currently yields around 3.3% while VYM yields around 2.3%. On income alone, SCHD wins the SCHD vs VYM comparison. But VYM’s lower yield partly reflects its broader exposure to tech and growth companies that pay smaller dividends.

Start Modeling Your Own Numbers

Talking about yields and percentages is useful. But seeing what YOUR money does over time is better. Use our SCHD Dividend Calculator to model exactly how much income SCHD could generate based on your investment amount, timeline, and reinvestment strategy.

You can also use our DRIP Calculator to see how reinvesting dividends accelerates your compounding across any dividend ETF, including VYM.

Whichever fund you choose, the most important thing is to start. Time in the market is the biggest advantage any dividend investor has. Both SCHD and VYM reward the patient investor who shows up consistently, reinvests their dividends, and stays the course through market ups and downs.