VOO vs SCHD: Side-by-Side ETF Comparison

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

Table of Content

ETF Issuers & Investment Objective

• 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.
• 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.

Annual & Cumulative Returns

Looking at total performance, VOO has delivered stronger cumulative returns than SCHD across all time horizons, thanks largely to its high exposure to growth-oriented sectors like tech and consumer discretionary. SCHD, on the other hand, favors dividend reliability over capital appreciation, making it more appealing to investors focused on income rather than beating the market. The divergence becomes especially clear during strong bull runs, where growth stocks dominate index gains.

Risk Metrics

Although SCHD is often perceived as a more defensive ETF, its historical volatility has not been meaningfully lower than VOO’s particularly over longer periods. More importantly, VOO’s superior Sharpe ratio suggests investors are being compensated more effectively for the risk they’re taking. That’s largely because VOO’s top-weighted names, while more volatile, have delivered consistent outperformance and helped smooth the ride on a risk-adjusted basis.

• 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

One of SCHD’s standout characteristics is its impressive yield over 4%, which substantially exceeds that of VOO. This higher payout is the direct result of SCHD’s rules-based selection of companies with robust dividend histories and healthy balance sheets. While both ETFs pay quarterly, SCHD is better suited for those who want their portfolio to generate consistent income rather than reinvest for growth.

Fees & Liquidity

Both SCHD and VOO rank among the most affordable ETFs in the market, but VOO’s 0.03% expense ratio gives it a slight long-term advantage in cost efficiency. The difference may appear negligible in the short term, but it compounds over time. In terms of tradability, both funds are highly liquid with narrow spreads, ensuring minimal friction for both buy-and-hold investors and tactical traders.

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 in both funds is remarkably similar: nearly full equity exposure and minimal cash or bonds. SCHD has a slightly broader reach with a touch more non-U.S. exposure, but its focus remains firmly on U.S.-listed companies. This near-total equity exposure reinforces their respective strategies VOO for comprehensive S&P 500 exposure, SCHD for screened dividend payers.

Regional Allocation

Geographically, there’s little that separates these two ETFs both are overwhelmingly U.S.-focused. SCHD includes a small allocation to UK stocks, likely driven by dividend yield screens, while VOO strictly holds U.S. equities from the S&P 500 index. However, many of VOO’s holdings derive significant revenue from global markets, offering indirect international diversification.

Sector Weights

Sector exposure is where the contrast between these ETFs really shows. SCHD tilts toward dividend-friendly sectors like Consumer Defensive, Energy, and Healthcare, which often perform well in uncertain markets. In contrast, VOO’s top-heavy allocation to the Technology sector provides greater upside potential but also more sensitivity to market cycles and economic shifts.

Top 10 Holdings

VOO’s top 10 holdings are a who’s who of market-driving giants like Apple, Microsoft, and NVIDIA companies that have fueled much of the index’s recent gains. SCHD’s top names, including Coca-Cola and Verizon, reflect its emphasis on dependable dividend payers. The divergence here isn’t just in names it’s a reflection of two different portfolio philosophies: one prioritizing growth, the other prioritizing cash flow.

Valuation & Growth Metrics

Valuation Ratios

Valuation metrics reinforce the stylistic differences between the two funds. SCHD trades at a significant discount to VOO across all major ratios P/E, P/B, and P/S highlighting its value-oriented approach. VOO’s higher multiples are justified by its growth profile and the premium investors are willing to pay for future earnings, especially in tech-dominated portfolios.

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-oriented investors will find VOO more attractive, as it boasts nearly double the long-term earnings growth rate compared to SCHD. Its constituents have also delivered stronger historical growth across earnings, revenue, and cash flow. Meanwhile, SCHD’s slower growth reflects its tilt toward mature companies with stable, but less explosive financial trajectories, appealing more to income-focused, conservative investors.

Which ETF Fits Your Portfolio - VOO vs SCHD?

Choosing between VOO and SCHD 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.