SCHD vs VYM: Side-by-Side ETF Comparison

Which one is better? VYM offers broader diversification and stronger long-term growth, while SCHD focuses on high-yield, financially solid dividend payers with a more value-oriented tilt. Choose VYM for balanced total return or SCHD if reliable income and dividend strength are your top priorities.

Table of Content

ETF Issuers & Investment Objective

• SCHD: Launched by Charles Schwab in 2011, the Schwab U.S. Dividend Equity ETF tracks an index of high-quality U.S. companies with a proven history of paying and growing dividends. SCHD emphasizes financial strength, return on equity, and dividend consistency, positioning it as a concentrated, fundamentals-driven income solution for long-term investors.
• VYM: Issued by Vanguard, the Vanguard High Dividend Yield ETF was designed to provide investors exposure to a broad basket of large-cap U.S. companies with above-average dividend yields. Since its inception in 2006, VYM has focused on combining income generation with diversified sector exposure, making it a staple for investors seeking passive income without sacrificing growth potential.

Annual & Cumulative Returns

When looking at raw performance over 1, 3, 5, and 10 years, VYM clearly outpaces SCHD, suggesting stronger momentum and price appreciation over time. Much of this can be attributed to VYM’s broader exposure to growth-oriented sectors especially tech which have led market gains in recent years. SCHD’s underperformance isn’t a flaw, but rather a trade-off for stability, as it focuses on dependable dividend payers, many of which tend to lag during bull runs dominated by high-growth names.

Risk Metrics

Despite relatively similar volatility levels, the difference in Sharpe ratios is striking VYM has managed to convert volatility into return, while SCHD has not. This disparity reinforces the idea that SCHD’s recent sector exposures (e.g., energy, staples) introduced volatility without delivering proportional upside. For investors seeking efficient risk-reward profiles, VYM may currently hold the edge though that could shift if defensive sectors come back into favor.

• 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

SCHD shines for yield-focused investors, offering more than double the dividend yield of VYM. That’s a reflection of its deliberate focus on companies with robust dividend histories and attractive payout ratios. VYM, while still income-oriented, casts a wider net across the market, including lower-yielding but faster-growing firms making it better suited for those who want some income without compromising on growth.

Fees & Liquidity

From a fee perspective, both ETFs are extremely cost-efficient, with VYM being slightly cheaper. While SCHD’s 0.06% expense ratio is still well below industry averages, the fee gap could matter for cost-sensitive, buy-and-hold investors. Although liquidity metrics aren't listed, both funds trade heavily and have deep asset bases, so execution quality for most investors should be nearly identical.

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

Asset allocation reveals that both VYM and SCHD are essentially all-in on U.S. equities, in line with their stated strategies. However, the slightly larger foreign stock allocation in SCHD suggests a modest openness to international exposure via ADRs. These small deviations are operational rather than philosophical and unlikely to meaningfully impact performance but they’re worth noting for purists.

Regional Allocation

In terms of geographic reach, both ETFs are overwhelmingly concentrated in North America, making them ideal for investors seeking targeted U.S. equity exposure. SCHD's minor UK allocation reflects its dividend screen, which occasionally includes foreign-based companies listed in the U.S. VYM remains essentially domestic, reinforcing its alignment with investors focused on U.S. large-cap equities.

Sector Weights

Sector composition illustrates the fundamental divide in strategy. VYM is tilted toward high-growth sectors like technology and communications, while SCHD favors industries with historically stronger dividend records such as consumer defensive, industrials, and energy. These structural differences help explain why SCHD is more resilient in sideways or bearish markets, whereas VYM tends to outperform during risk-on rallies.

Top 10 Holdings

There’s a complete divergence in the top holdings of VYM and SCHD, reinforcing how distinct their selection methodologies are. VYM’s lineup is dominated by high-growth megacaps, which have led recent bull markets, while SCHD prefers dividend stalwarts with more conservative growth profiles. This contrast makes the two ETFs complementary for investors looking to diversify across both income and growth factors.

Valuation & Growth Metrics

Valuation Ratios

On a valuation basis, SCHD screens as the far cheaper fund, reflecting its emphasis on undervalued and mature dividend-paying stocks. These lower multiples may appeal to value investors or those anticipating a rotation away from growth. In contrast, VYM’s higher valuations are a result of its tilt toward growthier names companies that command a premium thanks to their earnings potential and market leadership.

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

Growth metrics clearly favor VYM, with substantially higher figures across the board, from earnings to book value expansion. SCHD’s lagging and even negative growth in certain areas suggests its holdings are more focused on capital preservation and cash return than reinvestment. For investors seeking capital growth alongside moderate yield, VYM presents a more dynamic long-term profile, whereas SCHD is optimized for dependable income over explosive expansion.

Which ETF Fits Your Portfolio - SCHD vs VYM?

Choosing between VYM and SCHD ultimately comes down to your investment priorities: growth potential vs. income stability.

If you're looking for broad U.S. market exposure with a healthy mix of dividend-paying and growth-oriented companies, VYM offers stronger long-term performance, better growth metrics, and broader diversification across sectors including a meaningful tilt toward tech. It's a solid choice for investors who want both capital appreciation and modest income, especially in tax-advantaged accounts.

On the other hand, if your primary goal is reliable income with less emphasis on high-growth sectors, SCHD delivers with its higher dividend yield, lower valuations, and focus on financially sound U.S. companies with a history of consistent payouts. It may underperform in tech-led rallies, but shines when dividend stability and value investing take the spotlight.

For total return investors, VYM may be the more versatile core holding. For income-focused or retirement portfolios, SCHD’s yield and defensive posture make it a compelling anchor.