SCHD vs VYM: Side-by-Side ETF Comparison

SCHD vs VYM: Both cost 0.06% and sit in the large-value box, but SCHD pays a much higher 3.82% yield while VYM has delivered a stronger 13.95% one-year return. The split comes down to SCHD's income focus (20.6% energy, 18.2% consumer staples) versus VYM's broader, tech-heavier basket (22.1% financials, 16.7% tech).

Table of Content

• Annual & Cumulative Returns
• Risk Metrics
• Dividend Yield & Growth
• Fees & Liquidity
• ETF Composition: Asset Classes
• Regional Allocation
• Sector Weights
• Top 10 Holdings
• Valuation & Growth Metrics
• Which ETF Fits Your Portfolio?

ETF Issuers & Investment Objective

Schwab's SCHD takes a quality-first approach to dividend investing, screening for companies that not only pay high dividends but also demonstrate fundamental strength relative to peers. The fund's 3.82% yield reflects this selective process, which has led to heavy weighting in energy (20.6%) and consumer defensive stocks (18.2%) - sectors where companies often generate steady cash flows to support consistent dividend payments. This methodology means SCHD holds fewer stocks than typical dividend ETFs, creating a more concentrated portfolio of what Schwab considers the most financially sound dividend payers.

Vanguard's VYM follows a simpler strategy, tracking an index that captures the higher-yielding half of the dividend-paying universe without additional quality screens. The result is a more diversified portfolio with 2.44% yield that happens to weight financial services (22.1%) and technology (16.7%) more heavily. While VYM's broader approach includes some lower-quality dividend stocks, it's also captured stronger recent performance with 13.95% one-year returns versus SCHD's 7.80%. The trade-off becomes clear: SCHD offers higher current income with quality filters, while VYM provides broader exposure with typically lower volatility during market upswings.

Annual & Cumulative Returns

Looking at the performance data, VYM has delivered stronger returns over the past one, three, and five years - most notably with a nearly 14% gain in the past year compared to SCHD's 7.8%. This gap narrows considerably over longer periods, with SCHD actually pulling slightly ahead over a full decade at 12.81% versus VYM's 12.28%.

The contrasting 2024 performance tells an interesting story. SCHD's 6.23% year-to-date return more than doubles VYM's 2.91%, suggesting the funds respond differently to current market conditions. This pattern matters for investors because it shows these dividend-focused funds, while similar in objective, can produce materially different results depending on the time frame you're evaluating. The narrowing performance gap over longer periods hints that either approach can work, but timing and market cycles clearly favor one or the other at different points.

Risk Metrics

SCHD's volatility runs about one percentage point higher than VYM's across both time frames - 11.45% versus 9.32% over one year, and 12.61% versus 11.48% over three years. That extra bumpiness shows up in the Sharpe ratio too: VYM's 0.71 dwarfs SCHD's 0.20, meaning investors got considerably more return per unit of risk with VYM during this period. The numbers suggest VYM's broader diversification across financials and tech helped smooth the ride compared with SCHD's heavier tilt toward energy and consumer defensive stocks.

But volatility only tells part of the story. SCHD's higher dividend yield (3.82% versus 2.44%) and lower valuation (13.73 P/E versus 16.27) might compensate some investors for the extra swings, especially if they're prioritizing income over total return. The choice here isn't about finding the "better" ETF - it's about whether you want VYM's steadier path with modest income, or SCHD's bumpier journey with higher yields and value characteristics. Your decision should hinge on which profile matches your risk tolerance and whether you're drawing income now or reinvesting for later.

Dividend Yield & Growth

SCHD delivers 56% more income than VYM right now, paying 3.82% versus 2.44%. That gap matters if you're spending the dividends, but the higher yield comes from a portfolio trading at 13.7x earnings, noticeably cheaper than VYM's 16.3x multiple. Both funds keep costs identical at 0.06%, so every extra cent of SCHD's dividend lands in your pocket.

The trade-off is last year's performance: VYM's lower yield accompanied a 13.95% total return while SCHD managed 7.80%. Higher current income versus stronger recent momentum - neither outcome is "right," it simply depends whether you want cash today or price appreciation tomorrow.

Fees & Liquidity

Both ETFs charge the same rock-bottom expense ratio of 0.06%, which means you'll pay just 60 cents annually for every $1,000 invested. This fee parity eliminates cost as a deciding factor between the two funds - either way, you're getting institutional-level pricing that beats the vast majority of dividend-focused ETFs on the market.

The real cost differences show up in trading. SCHD typically maintains tighter bid-ask spreads, often just 1-2 basis points wide, while VYM's spreads can widen to 3-4 basis points during volatile sessions. For buy-and-hold investors, this won't matter much. But if you're dollar-cost averaging or rebalancing frequently, those extra basis points add up. VYM's larger asset base ($50+ billion vs SCHD's $20+ billion) provides more daily liquidity, yet SCHD's concentrated portfolio of 100 stocks trades more efficiently than VYM's 450+ holdings.

ETF Composition: Asset Classes

Both SCHD and VYM are virtually all-in on U.S. equities - SCHD parks 99.1% of its assets in American stocks while VYM holds 98.1%. The leftover slivers are largely rounding error: each fund keeps about 0.1% in cash and less than 2% in foreign names, mostly ADRs of multinationals that still trade in New York. In practice, neither portfolio offers meaningful international diversification, so the country exposure decision is essentially a wash.

The tiny gap between them - SCHD’s 0.8% extra domestic weight versus VYM’s 1.7% non-U.S. stake - won’t move the risk needle. What will move it are the sectors each fund uses to capture that domestic dividend stream, and that’s where the asset-class similarity ends.

Regional Allocation

Both SCHD and VYM keep their money close to home, with 99.2% and 98.3% of holdings parked in North America respectively. That tiny 0.9-percentage-point gap translates to just a handful more foreign names in the Vanguard portfolio. What stands out is how concentrated SCHD's remaining sliver is: nearly 0.8% sits in UK stocks, leaving almost nothing elsewhere. VYM spreads that same thin slice across five regions, giving it a toe-hold in developed Europe, Asia and even Africa/Middle East.

For investors who view dividend funds as a domestic anchor, either choice fits the bill, since the overseas exposure is immaterial. If you care about that last 1%, VYM's broader reach could add a touch of currency and market diversification, while SCHD's UK tilt keeps the currency risk but drops the geographic variety. In practice, both behave like pure-play U.S. large-cap portfolios, so pick based on other criteria and treat these micro-weights as rounding error.

Sector Weights

The sector split tells two different stories about dividend investing. SCHD leans hard into energy (20.6%) and consumer staples (18.2%), creating a portfolio that tends to hold up when markets get rocky. VYM takes the opposite approach, with financials dominating at 22.1% and a much heavier tech weighting at 16.7%. Energy exposure? Just 8.4%.

This explains why these funds behave differently despite both targeting dividend payers. SCHD's energy-heavy stance means it's more sensitive to oil prices and economic cycles, while VYM's financial and tech tilt makes it more of a bet on interest rates and growth. The healthcare allocation is similar enough (15.5% vs 13.3%) that it won't drive performance differences. If you're choosing between them, you're really deciding whether you want energy and consumer staples cushioning your downside, or financials and tech driving your upside.

Top 10 Holdings

SCHD spreads its bets more evenly, with Lockheed Martin leading at 4.69% and the top five names each sitting between 4% and 5% of the portfolio. That tight band means no single stock can hijack returns, a setup that matches the fund’s 13.7 P/E and its 3.8% yield: modest valuations, steady cash. VYM, by contrast, lets Broadcom dominate at 7.57% more than triple Walmart’s 2.30% slice so a swing in that one chip name will leave a bigger dent. The rest of its top five hover in the 2-4% range, giving the portfolio a bar-bell feel: a heavy tech counterweight balanced by staid banks and consumer staples.

The sector split behind the names tells the same story. SCHD’s largest positions lean toward cash-rich defense, energy and pharma firms businesses that can keep mailing checks even when growth stalls. VYM’s top roster carries a 16.3 P/E and only a 2.4% yield because it mixes faster-growing tech (Broadcom) with megabanks such as JPMorgan, a combo that helped it outrun SCHD by over six percentage points the past year. If you want the steadier dividend stream and lower valuation, SCHD’s flatter, blue-chip line-up delivers; if you’re comfortable letting a tech giant call more of the shots for extra growth, VYM’s concentration might suit you.

Valuation & Growth Metrics

SCHD trades at 13.7 times earnings, almost 2.5 points cheaper than VYM's 16.3 multiple, and the gap widens on sales: 1.4× revenue for SCHD versus 1.9× for VYM. Both funds price book value the same way around 2.7× so the discount is coming from earnings and top-line multiples, not asset write-downs. In plain terms, you're paying less for every dollar of profit and revenue when you buy SCHD.

That lower price tag, however, sits next to softer growth. Long-term earnings are expected to expand 9.1% at VYM but only 5.6% at SCHD, and the five-year track record shows VYM's profits grew 2.8% a year while SCHD's slipped 1.7%. Sales tell the same story: 5.2% growth at VYM, 4.3% at SCHD. Investors who want the cheaper valuation need to accept a portfolio with slower-growing companies; those willing to pay the higher multiple get a basket with noticeably better earnings momentum.

Which ETF Fits Your Portfolio?

SCHD's 3.82% yield gives you 56% more income than VYM's 2.44%, but that extra cash came at a real cost last year - SCHD gained just 7.8% while VYM returned 13.95%. The funds achieve these different results through their sector choices: SCHD loads up on energy (20.6%) and consumer staples (18.2%) which tend to be more defensive but slower-growing, while VYM has bigger stakes in financials (22.1%) and tech (16.7%) that powered last year's rally.

Your choice depends on what you're trying to accomplish. If you're living off portfolio income and want the highest sustainable yield, SCHD's approach of screening for dividend quality and fundamental strength makes sense despite potentially lower price appreciation. But if total return matters more than current income - maybe you're reinvesting dividends or don't need the cash flow yet - VYM's broader diversification and recent momentum might serve you better. Both charge the same rock-bottom 0.06% fee, so the decision really comes down to whether you prioritize higher yield now or growth potential later.

If you want to have look at other ETF comparisons, check out this: Fund Overlap Tool

Data sources: The data has been obtained from the ETF provider's website and ETF fact sheet.