SCHD vs VYM: Comparing Two Top Dividend ETFs for Income

Performance and Key Differences

The Schwab U.S. Dividend Equity ETF (SCHD) and Vanguard High Dividend Yield ETF (VYM) have both outperformed the S&P 500 and Nasdaq-100 in 2026. As of late July, SCHD and VYM each hold approximately $96 billion in net assets, with expense ratios of 0.06% and 0.04%, respectively. Their dividend yields stand at 3.3% for SCHD and 2.3% for VYM.

The primary distinction lies in their investment focus: SCHD emphasizes current dividend yield, while VYM balances dividend growth and yield. This is reflected in their sector allocations. SCHD has 41.1% in healthcare and consumer staples, whereas VYM is heavily weighted toward industrials, materials, and financials. Both have significant tech exposure, but SCHD's top holdings include Verizon Communications, Comcast, Texas Instruments, and Qualcomm. VYM's largest holding is Broadcom at 7.3%, with Cisco Systems also in its top 10.

Performance and Sector Exposure

SCHD's outperformance in 2026 is largely attributed to its overweight position in energy stocks, particularly Chevron and ConocoPhillips. Despite its value-oriented sectors, capital gains have driven long-term returns for both ETFs. Over the past decade, SCHD has delivered a total return of 225.7%, compared to 199.2% for VYM.

SCHD's higher yield and balanced exposure to defensive sectors make it a strong option for income-focused investors. However, its energy weighting introduces volatility, though holdings like Chevron and ConocoPhillips generate high free cash flow even at lower oil prices. VYM, with its lower yield, offers diversified exposure to financials and AI leaders like Broadcom, appealing to those prioritizing dividend growth.

What it means for income investors

SCHD provides a higher current yield and has historically outperformed VYM in total return. VYM offers a lower yield but focuses on quality dividend-growth companies. Both ETFs have low costs and have beaten major indices in 2026, but their different approaches suit different income objectives.

Reporting based on: Yahoo Finance. Figures verified against market data where available.