SCHD vs JEPI: Side-by-Side ETF Comparison

Which one is better? SCHD targets high-yielding U.S. dividend stocks with a value tilt and long-term track record, while JEPI focuses on generating steady income through option premiums and lower volatility.
Choose JEPI for smoother monthly income and downside protection, or SCHD for higher yield, lower fees, and pure dividend growth exposure.

Table of Content

ETF Issuers & Investment Objective

• SCHD: Managed by Charles Schwab Investment Management since its October 2011 inception, SCHD aims to track the Dow Jones U.S. Dividend 100 Index, investing at least 90 % of its assets in high-dividend-yielding U.S. companies selected for dividend consistency and fundamental strength, thereby offering a low-cost, passive approach to income-focused large-cap equities.
• JEPI: Managed by JPMorgan Asset Management since its May 2020 launch, JEPI seeks to deliver equity market exposure with enhanced income by combining an actively managed portfolio of S&P 500 stocks and equity-linked notes with a covered-call overlay that sells S&P 500 call options to generate option premiums.

Annual & Cumulative Returns

The performance gap between JEPI and SCHD highlights how structure and age influence total returns. JEPI’s absence of a 10-year return isn't a drawback but a reminder that it's a newer innovation aimed at blending income and lower risk. Over shorter timeframes like the past 1–3 years, JEPI’s ability to harness option premiums gives it a noticeable advantage, especially in choppy markets where defensive yield isn't enough. Meanwhile, SCHD’s strength over 5–10 years underscores the power of dividend reinvestment and compounding over time. In a sense, JEPI thrives on market friction, while SCHD shines in long, uninterrupted growth cycles.

Risk Metrics

JEPI’s performance on a risk-adjusted basis is a direct result of its strategic use of covered calls, which smooth out equity volatility and generate consistent premiums. Its higher Sharpe ratio speaks to better compensation for risk taken. In contrast, SCHD, with its heavier exposure to cyclical dividend sectors like energy and industrials, may face steeper drawdowns during market corrections. So while SCHD offers a purer dividend experience, JEPI may appeal more to investors seeking yield without as many roller-coaster moments.

• Volatility reflects the degree of price fluctuations; higher volatility often correlates with greater risk and potential returns.
• Sharpe Ratio measures risk-adjusted returns, where higher ratios indicate more favorable returns for the risk assumed.

Dividend Yield & Growth

At first glance, SCHD’s higher yield appears to make it the obvious choice for income-focused investors. However, JEPI’s story is more nuanced it delivers income not just from dividends, but from option strategies that pay out monthly, offering consistent cash flow even when dividend growth slows. SCHD remains the yield king for those wanting maximum passive income, but JEPI may suit those who prioritize frequency and predictability over raw percentage.

Fees & Liquidity

SCHD’s ultra-low expense ratio reflects its passive construction, which is ideal for hands-off, long-term investors focused on minimizing fees. JEPI, however, justifies its higher fee by actively managing risk and income through derivatives. While SCHD likely maintains a slight edge in trading liquidity due to its higher AUM, JEPI’s fee is more about the service it provides: consistent income with dampened volatility. It's not just a cost comparison it’s a question of what you’re paying for.

Explanation:

• Expense Ratio is the annual fee taken by the fund manager, expressed as a % of your investment.
• Bid-Ask Spread is the difference between the buying and selling price. Smaller spreads mean lower transaction costs.

ETF Composition: Asset Classes

Both funds are U.S.-centric, but JEPI adds a small dose of non-U.S. equity and a bit more cash for operational flexibility particularly important for funding its options strategy. SCHD’s nearly 100 % domestic stock allocation makes it a more concentrated bet on U.S. dividend payers. Investors wanting a straightforward, fully invested dividend ETF may prefer SCHD, while those seeking optionality and flexibility might appreciate JEPI’s slightly more diversified footprint.

Regional Allocation

While both ETFs are heavily tilted toward North America, JEPI includes marginal exposure to developed markets in Europe and Asia, giving it a touch more global flavor. SCHD, by design, remains locked into U.S.-listed companies, enhancing its purity for investors looking for a strictly domestic dividend play. This minor international reach may not shift overall returns much, but for diversification purists, JEPI edges ahead ever so slightly.

Sector Weights

JEPI emphasizes growth sectors like Technology and Industrials, aiming to balance income with capital appreciation opportunities. Its tilt aligns with the broader S&P 500, allowing for richer option premiums. SCHD, in contrast, leans into classic dividend sectors Consumer Defensive, Energy, and Healthcare focusing on income consistency and lower turnover. Ultimately, JEPI provides a more balanced growth-income hybrid, while SCHD doubles down on dividend reliability and sector defensiveness.

Top 10 Holdings

The contrast in top holdings reveals each fund’s strategic DNA. JEPI prefers highly liquid, option-friendly megacaps like Visa, Mastercard, and Microsoft ideal for its income-generation model. SCHD gravitates toward high-yield stalwarts like Coca-Cola and Verizon that fit its rules-based dividend screen. There’s minimal overlap, which means combining the two funds could actually result in meaningful diversification across both names and income sources.

Valuation & Growth Metrics

Valuation Ratios

JEPI trades at higher valuation multiples, reflecting its exposure to quality growth names that command premium prices and generate lucrative option premiums. SCHD, by contrast, is firmly value-oriented, with low P/E and P/B ratios that suggest it offers more yield per dollar invested. From a valuation lens, JEPI may appeal to investors comfortable with paying up for growth and innovation, while SCHD caters to traditionalists who prize disciplined fundamentals and undervalued income streams.

Explanation:

• P/E Ratio = Price divided by earnings. Indicates how expensive a fund is relative to profits.
• Price/Book = Price vs book value (assets minus liabilities).
• Price/Sales = Price relative to total revenue.
• Price/Cash Flow = Price relative to how much cash the companies generate.

Growth Expectations

JEPI shows impressive earnings and revenue growth across both projections and historicals, benefiting from its lean toward tech, industrials, and consumer cyclicals. SCHD’s negative growth rates in some metrics underscore its deep value bias great for stable yield, but less dynamic during economic expansions. JEPI may better suit investors who want a more forward-looking, adaptive income vehicle, while SCHD remains ideal for those who view dividends as a reflection of financial strength and durability.

Which ETF Fits Your Portfolio - SCHD vs JEPI?

Your decision between JEPI and SCHD hinges on what kind of income strategy you value most stability with optionality, or high-yield consistency with simplicity. JEPI appeals to investors who want smoother ride quality and dependable monthly income. Its covered-call overlay not only generates cash flow but also helps buffer against volatility, making it well-suited for retirees or conservative investors who prefer a more defensive posture despite its higher 0.35 % fee.

By contrast, SCHD offers a compelling value proposition for long-term investors who prioritize yield, cost efficiency, and straightforward exposure to high-quality U.S. dividend stocks. Its ultra-low 0.06 % expense ratio and strong 10-year return track record underscore its appeal for buy-and-hold strategies. The fund’s heavier weighting in sectors like Consumer Defensive and Energy adds a layer of protection in economic slowdowns, while its consistent quarterly payouts make it a reliable income engine.

Ultimately, if you’re after lower volatility with a strategic income overlay, JEPI may better align with your needs. If your focus is maximum dividend yield with minimal cost and hands-off management, SCHD stands out. For those wanting the best of both worlds, a blended allocation can provide complementary strengths balancing premium income and market stability with high-yield dividend exposure.