SCHD vs VOO: Side-by-Side ETF Comparison

Which one is better? SCHD focuses on high-dividend, fundamentally strong U.S. companies with a value tilt, while VOO tracks the broader S&P 500 with a strong bias toward growth and mega-cap tech. Choose SCHD for income and stability, or VOO for long-term growth and market-wide exposure.

Table of Content

ETF Issuers & Investment Objective

• SCHD: Launched by Charles Schwab in 2011, the Schwab U.S. Dividend Equity ETF (SCHD) is designed to track the Dow Jones U.S. Dividend 100 Index. It focuses on high-dividend-yielding U.S. companies with strong fundamentals, including consistent earnings and solid financial ratios. SCHD emphasizes quality and income, making it a favorite for investors seeking steady cash flow and lower volatility through market cycles.
• VOO: Managed by Vanguard since its inception in 2010, the Vanguard S&P 500 ETF (VOO) aims to replicate the performance of the S&P 500 Index, a widely followed benchmark of the U.S. large-cap equity market. VOO provides instant diversification across 500 of the largest U.S. companies, with a strong tilt toward technology and growth-oriented sectors, making it a core holding for long-term, growth-focused investors.

Annual & Cumulative Returns

VOO has consistently outperformed SCHD across all measured time periods from 1 year to 10 years thanks to its exposure to high-growth sectors like technology and consumer discretionary. SCHD, with its emphasis on dividend-paying stocks, delivers more modest total returns but appeals to those prioritizing income stability over aggressive capital growth. The performance gap is especially noticeable during bull markets, where growth stocks dominate.

Risk Metrics

Despite being a dividend-focused ETF, SCHD has shown slightly higher volatility over the past year compared to VOO. However, VOO’s significantly higher Sharpe ratio (0.61 vs. 0.02) highlights its superior risk-adjusted returns. This is largely due to the consistent outperformance of its largest tech-driven holdings, which have provided both high returns and relatively efficient risk management over time.

• 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

This table illustrates one of SCHD’s strongest advantages: income. Its dividend yield sits at over 4%, far eclipsing VOO’s 1.5%. That higher yield reflects SCHD’s targeted strategy of investing in high-quality companies with a strong dividend history. Both ETFs distribute dividends quarterly, but SCHD clearly caters to income investors, while VOO leans toward total return seekers.

Fees & Liquidity

While both funds are extremely cost-efficient, VOO has the slight edge with a rock-bottom 0.03% expense ratio compared to SCHD’s 0.06%. This difference is minimal for most investors, but over decades it can compound. Liquidity-wise, both are top-tier with tight spreads and high trading volumes ideal for long-term investors and active traders alike.

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

VOO and SCHD are both nearly 100% equity funds with negligible allocations to cash or international holdings. SCHD has a slightly higher allocation to non-U.S. equities (0.63% vs. 0.51%), but both are laser-focused on U.S.-based companies. These asset breakdowns reflect their core mandates: VOO for broad S&P 500 coverage and SCHD for U.S. dividend strength.

Regional Allocation

Both ETFs are overwhelmingly concentrated in North America, with SCHD allocating 99.37% and VOO slightly higher at 99.48%. SCHD includes a minor UK allocation (0.55%) due to certain dividend-focused inclusions. VOO, as a strict S&P 500 tracker, includes only U.S.-listed firms but may have indirect international revenue exposure through those companies’ global operations.

Sector Weights

The sector allocation highlights each ETF’s strategic focus. SCHD leans heavily into Consumer Defensive, Energy, and Healthcare sectors typical dividend-rich areas. In contrast, VOO is dominated by Technology, which alone makes up nearly a third of its portfolio. This explains VOO’s growth potential and higher historical returns, whereas SCHD emphasizes stability and consistent income.

Top 10 Holdings

SCHD’s top holdings are dividend legends like Coca-Cola, Verizon, and Cisco all with substantial allocations around 4%. These companies are known for reliable payouts and financial resilience. VOO, meanwhile, features the usual tech titans Apple, Microsoft, NVIDIA whose outsized influence drives both the fund’s risk and reward. SCHD’s approach centers on yield and balance; VOO’s, on market cap dominance.

Valuation & Growth Metrics

Valuation Ratios

From a valuation standpoint, SCHD is clearly the more conservative play. Its forward P/E and P/B ratios are significantly lower, which makes sense given its focus on established value stocks. VOO, with higher valuation multiples, reflects investor optimism around future growth, especially from its tech-heavy components. For value investors, SCHD offers a cheaper entry point with generous income.

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

VOO shines when it comes to growth both forward-looking and historical. It boasts nearly 10% projected earnings growth and strong track records in revenue and cash flow expansion. SCHD, in contrast, reveals slower and even negative historical growth in some metrics, as its holdings tend to be in mature industries. For growth-focused portfolios, VOO offers more upside; SCHD appeals to those who value consistent, income-generating stability.

Which ETF Fits Your Portfolio - SCHD vs VOO?

Choosing between SCHD and VOO ultimately comes down to your investment goals and what role the ETF plays in your portfolio.

If you're seeking reliable income, lower valuations, and exposure to high-quality, dividend-paying U.S. companies, SCHD offers a compelling case. With its ~4% yield and sector tilts toward Consumer Defensive, Energy, and Healthcare, it’s built for investors who prioritize stability and cash flow particularly in retirement or during sideways markets.

On the other hand, if your goal is broad exposure to U.S. large-cap growth, market-cap leadership, and maximum long-term total return, VOO remains a gold standard. Its dominance in tech and mega-cap names like Apple, Microsoft, and NVIDIA has historically fueled strong capital appreciation. VOO is ideal for investors who can weather short-term volatility in exchange for long-term performance, especially in growth-focused accounts like IRAs or taxable portfolios with low turnover.

In short:

• Choose SCHD if you want dividend income, value orientation, and defensive exposure.
• Choose VOO if you want broad market growth, tech leadership, and total return.

You could also combine both using SCHD for income stability and VOO for growth upside to build a more balanced, resilient core portfolio.