■ Analysis · August 25, 2026
SCHD and OVL: A Look at Two Dividend ETFs with Different Strategies
SCHD offers reliable dividend growth, while OVL uses options to generate high income. Both have merits, but OVL carries more risk.
SCHD: A Core Dividend ETF
The Schwab U.S. Dividend Equity ETF (SCHD) is a passively managed fund that holds 100 dividend-paying stocks selected for yield and dividend growth. Its trailing 12-month yield is 3.1%, triple the S&P 500's yield, and its holdings have grown dividends at an average annual rate of 9.4%. Since its inception, SCHD has delivered strong total returns, making it a popular choice for long-term investors seeking income and growth.
OVL: An Options-Based Income ETF
The Overlay Shares Large Cap Equity ETF (OVL) is an actively managed fund that aims to outperform the S&P 500's total return through a combination of capital appreciation and income from an options overlay strategy. Unlike many income ETFs that write call options, OVL sells put options using a put credit spread strategy. It writes out-of-the-money put options on the S&P 500 while buying lower-strike put options for protection, generating net credits that are distributed as monthly income. The fund also invests in the Vanguard S&P 500 ETF, providing direct upside exposure to the market.
OVL has delivered a trailing 12-month yield of 10.5%, more than triple SCHD's yield, and has achieved a 17.2% average annual total return since its inception in 2019, outperforming the S&P 500 (16.2%) and SCHD (13.8%). However, OVL is a small fund with $411 million in assets under management compared to SCHD's $112 billion, and it has a higher expense ratio of 0.79% versus SCHD's 0.06%.
Risk Considerations
Writing put options adds downside exposure, though the risk is capped at the lower strike price. Income generation may be lumpier, and the fund could underperform during market sell-offs. In contrast, SCHD's strategy is more straightforward, focusing on dividend-paying stocks with a history of growth.
What it means for income investors
SCHD offers a reliable, growing income stream with lower risk, while OVL provides higher current income but with greater volatility and downside risk. Both ETFs have their place, but OVL may suit investors with a higher risk tolerance and a shorter income horizon.
Reporting based on: Currently.com. Figures verified against market data where available.