Which Dividend ETF Is Better for Income: Schwab's SCHD or Vanguard's VYM?

Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD) offers a higher trailing yield and stronger recent returns, while Vanguard High Dividend Yield ETF (NYSEMKT:VYM) provides lower fees and broader diversification.

These two funds are among the most popular choices for investors seeking consistent income from domestic equities. While both target companies with a history of high payouts, they use different screening criteria that result in distinct portfolio behaviors. Total assets under management (AUM) for both funds exceed $100 billion, reflecting their status as core holdings for many dividend-focused investors. By examining their cost structures and sector tilts, investors can determine which strategy better aligns with their long-term objectives.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Vanguard fund maintains a slight edge in affordability with its 0.04% expense ratio. However, the Schwab fund offers a higher payout, with a trailing dividend yield that currently sits 0.28 percentage points above its competitor.

Performance & risk comparison

What's inside

The Schwab U.S. Dividend Equity ETF focuses on quality and sustainability, tracking an index of 102 stocks selected for cash flow to debt, return on equity, and dividend growth rate. Its largest positions include Qualcomm at 4.83%, Texas Instruments at 4.45%, and Coca-Cola at 4.16%. The portfolio is concentrated in healthcare at 21%, consumer defensive at 20.4%, and energy at 14%. This fund was launched in 2011. Schwab U.S. Dividend Equity ETF has paid $1.05 per share over the trailing 12 months, which on its recent ~$33.68 share price works out to a 3.1% yield.

The Vanguard High Dividend Yield ETF provides broader diversification by holding more than 600 stocks across various industries. Its top holdings include Broadcom at 6.9%, JPMorgan Chase at 3.83%, and ExxonMobil at 2.70%. The fund is more heavily weighted toward financial services at 21%, followed by technology and industrials at 17% each. It was launched in 2006. Vanguard High Dividend Yield ETF has paid $4.52 per share over the trailing 12 months, which on its recent ~$159.26 share price works out to a 2.8% yield.