VYM vs SCHD: 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.

ETF Issuers & Investment Objective

• 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.
• 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.

Annual & Cumulative Returns

Over every major time frame from year-to-date to 10-year VYM has delivered consistently stronger performance than SCHD. This outperformance is largely attributable to VYM’s higher exposure to tech-driven growth stocks, which have surged in the last decade, especially in the AI-fueled rally of 2023–2025. In contrast, SCHD’s focus on mature, dividend-paying companies many of which are defensive or value-oriented has led to slower capital appreciation, particularly in tech-led bull markets.

Risk Metrics

While both ETFs show similar 3-year volatility, VYM’s Sharpe ratio of 0.61 compared to SCHD’s 0.02 reveals a stark difference in risk-adjusted performance. This indicates that VYM has delivered significantly better returns per unit of risk. The slightly higher volatility of SCHD over the last year stems from its heavy weighting in cyclical sectors like energy and consumer staples, which have experienced sharp pricing swings in response to inflation and interest rate shifts.

• 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’s standout feature is its high dividend yield of 4.27%, nearly triple that of VYM. This reflects its methodology, which prioritizes stocks with a strong dividend history and financial health. VYM, by contrast, includes a broader swath of large-cap U.S. equities, many of which prioritize reinvestment and growth over payouts explaining the lower yield. For income-focused investors, SCHD offers a clear edge, albeit at the cost of growth potential.

Fees & Liquidity

Although both ETFs maintain low expense ratios by industry standards, SCHD is slightly pricier at 0.06% compared to VYM’s ultra-low 0.03%. This marginal difference is unlikely to sway most investors but could matter in very large portfolios. Liquidity data wasn't available, but in practice, both funds are heavily traded and widely held, meaning most retail investors won't face noticeable spreads or slippage.

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

Both funds are almost entirely invested in U.S. equities, with negligible exposure to cash or non-U.S. stocks. This U.S.-centric tilt aligns with their mandates, though SCHD edges slightly higher in international exposure due to a few select ADRs. The small difference in cash holdings VYM at 0.18% and SCHD at 0.10% likely reflects rebalancing activity rather than a strategic choice.

Regional Allocation

Geographically, both ETFs are laser-focused on North America, with over 99% of holdings located there. However, SCHD includes a small but notable stake in UK-listed equities, contributing to its higher exposure to dividend-heavy multinationals like British American Tobacco or GlaxoSmithKline. VYM has a tiny sliver of developed Europe, though it remains functionally domestic in practice.

Sector Weights

This table highlights the diverging philosophies behind the two funds. VYM leans heavily into tech and communication services, riding the wave of high-growth U.S. giants like Apple, Nvidia, and Meta. SCHD, on the other hand, concentrates on energy, consumer defensive, and industrials sectors known for stable earnings and strong dividend practices. These allocations directly influence each ETF’s performance and income characteristics.

Top 10 Holdings

Notably, there is zero overlap between the top 10 holdings of VYM and SCHD, underscoring their different approaches. VYM is dominated by mega-cap growth names from Silicon Valley and Wall Street, while SCHD features stalwarts like Coca-Cola, Lockheed Martin, and Verizon. SCHD’s picks prioritize consistent dividends and value metrics, while VYM favors broad market exposure, including high-flying tech.

Valuation & Growth Metrics

Valuation Ratios

SCHD’s portfolio is significantly cheaper on nearly every valuation metric, especially P/E, P/S, and P/CF ratios. This discount is typical for dividend-focused funds, which often overweight value stocks that may be slower-growing but financially sound. VYM, with its higher growth exposure, trades at a premium an expected trade-off for stronger historical returns.

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

Here the growth gap becomes evident: VYM holds a clear advantage across all growth metrics. Long-term earnings, sales, and book value growth rates are considerably higher in VYM’s portfolio, reflecting its inclusion of high-growth tech and consumer names. SCHD’s negative historical earnings and cash flow growth figures hint at the stagnation or contraction among some of its more mature holdings despite their reliable dividends.

Which ETF Fits Your Portfolio - VYM vs SCHD?

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.