Dividend Quality or High Yield
SCHD and VYM are both dividend ETFs, but they approach dividend investing from different angles.
SCHD tracks the Dow Jones U.S. Dividend 100 Index, focusing on dividend quality and sustainability. It screens for companies with strong fundamentals—solid cash flow, high returns on equity, and consistent dividend growth. The fund holds about 101 stocks, with its top 10 making up roughly 41% of the portfolio. It’s heavily weighted toward consumer staples, healthcare, and financials—basically blue-chip dividend growers that pass strict quality filters. Its current yield is around 3.7%, with a 0.06% expense ratio.
VYM is a broader play, tracking the FTSE High Dividend Yield Index with around 538 holdings. Its top 10 account for just 25% of the portfolio, giving you much wider diversification across financials, healthcare, energy, and even some tech like Broadcom. The fund prioritizes yield over quality metrics.
In practice, there are periods when SCHD outperforms, but overall VYM tends to come out ahead, especially when considering DCA backtesting and its broader diversification.
