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So which dividend ETF is the best for you, VIG, SCHD, or VYM?
I’ve done my research using Morningstar, Stock Rover, and Seeking Alpha on the key differences between VIG, SCHD, and VYM.
Hopefully, I can help you save time and make a more informed decision.
VIG Vs SCHD Vs VYM: Overview
| VIG
(Vanguard Dividend Appreciation Index ETF) |
SCHD
(Schwab US Dividend Equity ETF) |
VYM
(Vanguard High Dividend Yield ETF) |
|
| Track Which Index? | Vanguard Dividend Appreciation Index(i.e. companies increasing dividends for 10 or more consecutive years) | Dow Jones US Dividend 100 Index | FTSE High Dividend Index (i.e. companies with high dividend yield) |
| Issuer | Vanguard | Schwab | Vanguard |
| Inception | April 2006 | Oct 2011 | Nov 2006 |
| Expense Ratio | 0.06% | 0.06% | 0.06% |
| AUM (i.e. Assets Under Management) | 87.95 Billion | 53 Billion | 63.25 Billion |
VIG Vs SCHD Vs VYM: Portfolio Holdings
VIG, SCHD, and VYM are all dividend ETFs that invest in dividend stocks.
Do they invest in the same dividend stocks?
Let’s take a look.
There are a total of 315 dividend stocks in VIG.
Below is a list of VIG’s TOP 10 Holdings which account for 32% of the total portfolio:
What about VIG’s sector exposure?
As you can see, it overweights Technology, Financial Services, Healthcare and Industrials.
[Note: data from Morningstar]
There are a total of 100 dividend stocks in SCHD.
Below is a list of SCHD’s Top 10 Holdings which account for 42% of the total portfolio:
What about SCHD’s sector exposure?
It overweights Industrials, Healthcare, Financial Services, and Consumer Defensive.
There are a total of 449 dividend stocks in VYM.
Below is a list of VYM’s Top 10 Holdings which account for 25% of the total portfolio:
[Note: data from Morningstar]
What about VYM’s sector exposure?
It overweights Financial Services, Consumer Defensive, Industrials and Healthcare.
| VIG | SCHD | VYM | |
| Total No. of Dividend Stocks | 315 | 100 | 449 |
| % Asset In Top 10 Holdings | 32% | 42% | 25% |
| Sector Overweight | Technology | Industrials | Financial Services |
As you can see, SCHD is the least diversified with only 100 dividend stocks while VYM is the most diversified with 449 stocks.
In terms of concentration risk, SCHD is also the highest with its Top 10 Holdings almost accounting for about 40% of its entire portfolio.
In terms of sector exposure, VIG overweights technology while SCHD overweights Industrials and VYM overweights Financial Services.
VIG Vs SCHD Vs VYM: Performance
Now, let’s compare the performance of VIG Vs SCHD and VYM.
VIG started in April 2006.
SCHD started in Oct 2011.
VYM started in Nov 2006.
As they didn’t start on the same date, a direct comparison would not be very meaningful.
So, we will compare each dividend ETF against the S&P 500 index.
VIG vs the S&P 500 index (chart from StockRover)
SCHD vs the S&P 500 index (chart from StockRover)
VYM vs the S&P 500 index (chart from StockRover)
As you can see, VIG, SCHD, and VYM all underperformed the S&P 500 index since their inception.
However, VYM is the worst of the three with the largest difference in total return.
VIG and SCHD are quite similar in terms of performance.
As SCHD ETF was launched the latest in 2011, let’s compare the performance of VIG, SCHD, and VYM since the inception date of SCHD.
SCHD has been the best-performing dividend ETF among these three dividend ETFs since 2011.
However, all of them still cannot beat the S&P 500 index.
If you are a long-term investor, then investing in the S&P 500 index ETF still seems to be the best option.
VIG Vs SCHD Vs VYM: Dividend Yields
For dividend investors, two things are very important: dividend yield and the consistency of dividend payment.
Let’s first look at the dividend yield of VIG, SCHD, and VYM.
VIG Dividend Yield
[Note: data from Seeking Alpha]
SCHD Dividend Yield
VYM Dividend Yield
[Note: data from Seeking Alpha]
As you can see, VIG has the lowest dividend yield (i.e. under 2.5%) compared to SCHD and VYM.
SCHD’s dividend yield has been slowly increasing to around 3% while VYM’s dividend yield has been historically fluctuating around 3% with the exceptional spike in 2020.
In terms of dividend payment history, VIG, SCHD, and VYM all have been paying out dividends consistently every quarter since inception.
VIG Dividend Payment History
SCHD Dividend Payment History
VYM Dividend Payment History
Which Is The Best Dividend ETF?
So, which is the best dividend ETF, VIG, SCHD, or VYM?
If you are a long-term investor and not so concerned with how much dividend you get every year, then SPY still would be the best option because it outperforms all three dividend ETFs VIG, SCHD, and VYM.
If you are investing in a dividend ETF for income and not planning to reinvest back the dividends, then SCHD might be the best option among the three ETFs VIG, SCHD, and VYM.
This is because SCHD has the highest dividend yield and has been steadily increasing its dividend yield while VYM has been staying mostly stagnant (except for an unusual spike in 2020) and VIG’s dividend yield is relatively low and not consistently increasing over time.
By the way, VIG, SCHD, and VYM only pay out dividends every quarter.
So, if you are an investor who wants monthly dividend income, you can check out my article on JEPI which is a monthly dividend ETF by investing in the S&P 500 index component stocks and selling call options for monthly income.
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