VYM vs SCHD: Side-by-Side ETF Comparison

VYM vs SCHD both charge 0.06% but SCHD delivers a 3.82% yield versus VYM's 2.44% while trading at a lower 13.7x P/E. VYM leans on financials (22%) and tech (17%) and has outpaced SCHD 14% to 7.8% over the past year, so you're choosing between higher current income (SCHD) or recent momentum (VYM).

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

Vanguard's VYM casts a wide net across the large-cap universe, simply scooping up every stock whose trailing dividend yield lands in the top half of the market and then weighting them by market value. The portfolio replicates the FTSE High Dividend Yield Index, which explains why roughly one-fifth of assets sit in financials and another 17% in technology sectors whose large constituents push them to the top of a cap-weighted lineup. Schwab's SCHD, on the other hand, starts with a dividend requirement but adds a quality screen: only companies that have paid dividends for at least ten straight years and score well on cash-flow-to-debt, return on equity, and dividend-growth metrics make the cut. The result is a more concentrated basket; energy (21%) and consumer staples (18%) currently dominate because those groups now offer both the yield Schwab wants and the balance-sheet strength it demands.

Both funds charge the same 0.06% expense ratio and land in the large-value box, yet their construction philosophies diverge quickly once you look under the hood. VYM's P/E of 16.3 sits a notch above SCHD's 13.7, a reflection of its heavier tech tilt and looser quality filter. Yield works the opposite way: SCHD's 3.8% payout is a full 1.4 percentage points above VYM's 2.4%, even though it owns fewer names. That gap, plus the sector skews, means the ETFs often move out of step over the past year VYM's 14% return has doubled SCHD's 7.8%, but the Schwab product has historically held up better when markets sour. Investors choosing between them are really deciding whether they want a broad, low-maintenance dividend harvest (VYM) or a higher-yield, quality-tilted approach that may lag in rallies but offers a bit more cushion in downturns (SCHD).

Annual & Cumulative Returns

VYM has sprinted ahead lately - up 13.95% over the past year versus SCHD's 7.8%. The gap widens further when you stretch the timeline: VYM's three-year annualized return of 13.69% leaves SCHD's 8.5% in the dust. These differences add up. An investor who put $10,000 in VYM five years ago would have roughly $1,800 more than the same investment in SCHD, despite both funds costing just 0.06% annually.

Yet the story flips when you zoom out further. SCHD's 12.81% ten-year annualized return edges past VYM's 12.28%, and its 2024 showing (6.23% YTD) suggests it might be finding its stride again. The recent underperformance stems largely from SCHD's 20.6% energy allocation - that sector's volatility has dragged on returns while VYM's 22% financial services weighting benefited from rising rates. Neither fund consistently dominates; they just win in different market cycles.

Risk Metrics

VYM has shown steadier footing across both timeframes, with one-year volatility running 9.32% and a three-year reading of 11.48%. SCHD’s corresponding figures 11.45% and 12.61% are higher, meaning its daily price swings have been about one-fifth wider. That extra bump in variance hasn’t been rewarded lately: the fund’s three-year Sharpe ratio sits at just 0.2, well below VYM’s 0.7, so investors in SCHD accepted more turbulence per unit of excess return. The gap suggests VYM’s large financial and tech positions have provided a smoother ride than SCHD’s heavier tilt toward energy and consumer staples, sectors that have faced sharper earnings revisions and commodity-linked mood swings.

None of this guarantees the pattern will persist, but the numbers do flag a temperament difference worth matching to your own. If smaller draw-downs help you stay invested, VYM’s lower volatility and better risk-adjusted record offer a slight edge. On the other hand, SCHD’s higher yield and cheaper valuation (13.7 vs 16.3 P/E) may appeal to buyers who can stomach the extra swings and want more income up front. Choose the profile that lets you hold on through the next market squall rather than the one that looks best in the rear-view mirror.

Dividend Yield & Growth

SCHD's 3.82% yield towers over VYM's 2.44%, handing investors roughly 56% more cash income on every dollar invested. That gap is real money: park $100k in SCHD and you'll collect about $3,820 in dividends this year versus $2,440 from VYM. The trade-off is that higher yields often come from companies paying out a larger share of earnings, which can leave less room for reinvestment and future growth.

Both funds spread payments across the calendar, but neither follows the monthly-check schedule some retirees crave. What matters is durability: SCHD's underlying index screens for companies that have not just paid but consistently raised dividends for at least ten years, while VYM simply grabs the higher-yield half of the large-cap universe. In practice, this means SCHD's extra yield is backed by firms like Texas Instruments and Home Depot that have grown payouts through multiple recessions, whereas VYM's lower yield includes steady names but also some value traps whose dividends look high only because their stock prices have fallen.

Fees & Liquidity

Both funds charge the same rock-bottom 0.06% expense ratio, so on a $10,000 position you're out just six bucks a year basically a rounding error. That parity means the fee column won't sway your decision; instead, watch bid-ask spreads and average daily volume if you trade smaller lots or use market orders. VYM's $3-plus billion in assets and years of secondary-market history keep its spread reliably at a penny, while SCHD, though smaller, still prints tight quotes most sessions.

The real cost difference shows up in how each basket behaves after you own it. VYM's 2.44% yield means you're getting a quarterly cash stream that slightly dilutes the internal compounding, whereas SCHD's 3.82% yield puts more cash back in your pocket nice if you reinvest manually, but the higher payout can also enlarge the tax drag in a taxable account. Same fee, different cash-flow rhythm; pick the one whose distribution schedule matches how you like to handle dividends.

ETF Composition: Asset Classes

Both ETFs keep things simple with near-identical portfolios: VYM has 98.1% in U.S. equities while SCHD sits at 99.1%. The tiny residual shows up as fractional cash, a handful of foreign listings, and tracking-error buffers. For practical purposes you’re buying a pure domestic large-cap basket either way; the 0.9 percentage-point gap between the two is too small to move the needle on currency or geographic risk.

What matters more is how that domestic slice is spread across sectors, and here the funds diverge. VYM leans toward financials and tech two areas that can swing with rates and growth expectations while SCHD’s heaviest weight is energy, a group that can spike when oil rallies but also drag when it doesn’t. If you already own broad-market index funds loaded with tech megacaps, VYM can leave you doubly exposed; if you’re light on commodities or consumer staples, SCHD offers a bit more balance.

Regional Allocation

Both ETFs stay almost entirely in North America, but SCHD takes this home-country bias further with 99.2% parked in U.S. and Canadian stocks versus VYM’s still-heavy 98.3%. That extra 0.8 percentage-point tilt means SCHD investors have even less cushion if the dollar weakens or overseas markets sprint ahead. VYM sprinkles the remaining 1.7% across developed Europe, the U.K. and a sliver of emerging Asia and Latin America, enough to pick up a handful of ADRs like Unilever or Taiwan Semiconductor that happen to pay fat dividends.

For anyone worried about currency risk, the difference is basically rounding error neither fund offers meaningful foreign exposure. Yet if you want every last basis point of yield sourced from the highest-paying U.S. names, SCHD’s 99% domestic weight delivers that purity. VYM’s micro-allocation abroad won’t move the needle on performance, but it does leave the door open to occasional non-dollar income that SCHD effectively shuts.

Sector Weights

VYM leans heavily on financial services at 22.1% more than double SCHD's 9.4% weight while also parking 16.7% in technology giants like Microsoft and Apple. That pairing gives the portfolio a growth tilt that partly explains why it trades at 16.3× earnings. Energy barely moves the needle at 8.4%, and the fund keeps a classic “dividend” sector, utilities, at a modest 5.8%.

SCHD, by contrast, has flipped the script: energy pipelines and refiners command 20.6% of assets, consumer-staples mainstays such as Pepsi and Colgate another 18.2%, and healthcare a further 15.5%. The result is a lower 13.7× valuation and a payout that reaches 3.8%, but it also means less exposure to the tech names that have driven recent market gains. For investors, the choice is really between VYM’s bank-and-tech barbell or SCHD’s energy-and-soap trade-off, each carrying its own macro sensitivity.

Top 10 Holdings

VYM's top holdings read like a who's who of dividend stalwarts, with Broadcom commanding a hefty 7.57% position - nearly double the weight of SCHD's largest holding. The fund spreads its bets more evenly too, with JPMorgan at 4.15% and the remaining top five each sitting between 2-2.5%. This lighter concentration means no single stock can sink the ship, though it also caps the upside when one really takes off.

SCHD takes a different tack, keeping its largest positions within a tight 4-4.7% band. You'll find defense contractor Lockheed Martin at the top with 4.69%, followed closely by energy giant Chevron. The fund's methodology clearly favors companies with consistent dividend track records and solid fundamentals - notice how Texas Instruments makes the cut despite being a smaller tech name. For investors, this means SCHD offers more balanced exposure without any single stock dominating returns, though the 20.6% energy allocation (versus VYM's 2.41% Exxon weighting) makes it more sensitive to oil price swings.

Valuation & Growth Metrics

SCHD trades at a noticeably lower valuation across every metric in the table. At 13.7× forward earnings and 1.4× sales it’s priced about 15% below VYM’s 16.3× and 1.9×, while the two funds’ price-to-book figures are almost twins (2.67 vs 2.69). The discount shows up because SCHD’s selection screen keeps only companies that pass cash-flow, dividend-safety and balance-sheet tests; the resulting basket tilts toward out-of-favor sectors such as energy and consumer staples, and the market simply isn’t paying up for them right now.

Growth tells the opposite story. VYM’s holdings have delivered 9% long-term earnings growth and 5% sales growth, numbers that outpace SCHD’s 5.6% and 4.3%, and VYM’s historical earnings tally is still in the black (2.8%) while SCHD’s sits slightly negative (-1.7%). What this means: VYM gives you more of the broad-market cash-flow momentum at a “fair” price, whereas SCHD offers a valuation cushion in exchange for accepting slower-growing, more mature businesses. Neither profile is inherently better; it comes down to whether you want the cheaper entry point or the higher growth trajectory.

Which ETF Fits Your Portfolio?

If you're chasing yield above all else, SCHD's 3.82% dividend dwarfs VYM's 2.44%, and the Schwab portfolio's lower 13.7 P/E suggests you're paying less for every dollar of earnings. Yet that income comes with a trade-off: SCHD's 7.8% one-year gain trails VYM's 13.95% by more than six percentage points, a reminder that higher dividends can coincide with slower price appreciation.

Look under the hood and the sector splits tell the rest of the story. VYM leans toward financials and tech growth-oriented areas that helped power last year's stronger return while SCHD's heavy energy and consumer-defensive weighting delivers the steadier cash flow but less upside when markets rally. Both cost the same 0.06% and sit in the large-value box, so the decision really comes down to whether you want the higher current income (SCHD) or the more growth-tilted cash stream (VYM).

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.