SCHD vs. VIG is the defining debate for dividend growth investors. Both ETFs cost 0.06%, both focus on dividend-paying US companies, and both are designed for long-term income investors. The difference lies in selection philosophy:
- SCHD (Schwab US Dividend Equity ETF) — selects ~100 stocks for dividend quality + high yield
- VIG (Vanguard Dividend Appreciation ETF) — selects ~300+ stocks that have grown dividends for 10+ consecutive years
Quick Comparison: SCHD vs. VIG
| Feature | SCHD | VIG |
|---|---|---|
| Issuer | Schwab | Vanguard |
| Expense ratio | 0.06% | 0.06% |
| Holdings | ~100 | ~300+ |
| Index | Dow Jones US Dividend 100 | S&P US Dividend Growers |
| Yield (trailing) | ~3.0%–3.8% | ~1.6%–2.2% |
| 5-yr dividend growth rate | ~10–12%/year | ~7–9%/year |
| Tech exposure | Lower | Higher |
| Volatility | Moderate | Lower |
| Inception date | 2011 | 2006 |
Selection Criteria: How Each ETF Picks Stocks
SCHD’s 4-Factor Screen
SCHD’s index (Dow Jones US Dividend 100) requires:
- At least 10 consecutive years of dividend payments
- Minimum float-adjusted market cap and liquidity
- Then ranks on 4 factors: cash flow/debt, return on equity, dividend yield, and 5-year dividend growth rate
The top-ranked 100 stocks are selected. This screen produces a concentrated portfolio of high-quality, high-yielding companies.
VIG’s Single Screen
VIG’s index (S&P US Dividend Growers) requires:
- At least 10 consecutive years of dividend increases (not just payments)
- Must not be a REIT
- Minimum liquidity standards
This simpler filter produces a broader ~300+ stock portfolio. There is no yield screen — companies with lower but growing dividends are included.
Key implication: SCHD explicitly selects for high current yield as one of its 4 factors. VIG makes no such selection — it’s possible to have a very low yield and still qualify. This explains VIG’s lower average yield.
Which Has Better Returns?
SCHD has generally outperformed VIG on total return over most measurement periods:
| Period | SCHD total return (approx.) | VIG total return (approx.) |
|---|---|---|
| 5-year (2021–2025) | ~11–14% | ~10–13% |
| 10-year (2016–2025) | ~11–14% | ~11–14% |
The returns are close — SCHD’s quality/yield screen has historically provided a slight edge. But VIG’s larger diversification (300+ vs. 100 stocks) means individual holding risk is lower.
Income Comparison: Which Pays More?
SCHD generates significantly more quarterly income:
| Fund | Yield | Annual income on $100K |
|---|---|---|
| SCHD | 3.5% | $3,500/year |
| VIG | 1.9% | $1,900/year |
For retirees relying on dividend income to cover living expenses, SCHD is typically the more practical choice. VIG’s income is more suited to the accumulation phase.
Dividend Growth Comparison
Both ETFs grow dividends over time. SCHD’s higher growth rate compounds faster:
| Year | SCHD income (starting $3,500, ~10% growth) | VIG income (starting $1,900, ~8% growth) |
|---|---|---|
| 1 | $3,500 | $1,900 |
| 5 | ~$5,635 | ~$2,791 |
| 10 | ~$9,070 | ~$4,102 |
| 15 | ~$14,608 | ~$6,028 |
Volatility and Drawdowns
VIG is generally less volatile than SCHD:
- VIG’s 300+ holdings are more broadly diversified
- VIG’s tech exposure (Microsoft, Apple, Visa) provides growth stability
- SCHD’s concentration in 100 stocks creates more company-specific risk
During 2022’s rate-hike cycle, both VIG and SCHD sold off significantly. VIG held up slightly better due to its larger tech exposure. In 2020’s pandemic crash, both fell sharply but recovered quickly.
Sector Differences
| Sector | SCHD weight | VIG weight |
|---|---|---|
| Technology | ~12–14% | ~22–26% |
| Financials | ~18–22% | ~18–22% |
| Healthcare | ~14–16% | ~15–18% |
| Industrials | ~16–18% | ~12–15% |
| Consumer Staples | ~12–14% | ~8–10% |
VIG’s higher tech weighting reflects that many major tech companies (Microsoft, Apple, Visa) have 10+ year dividend growth records and qualify for VIG. SCHD’s yield screen depresses tech exposure (most tech companies prioritise buybacks over high dividends).
Which Is Better for a Roth IRA?
Both are Roth IRA staples. In a Roth IRA:
- Dividends compound tax-free — SCHD’s higher yield and growth rate compound more aggressively
- SCHD’s quality filter reduces the risk of holding dividend-cutting companies
- VIG’s lower volatility may suit conservative investors approaching retirement
Verdict: Both are excellent Roth IRA holdings. SCHD’s higher yield and dividend growth edge make it the slight favourite for maximum income compounding.
Can You Own Both SCHD and VIG?
Yes — this is common among dividend investors. Benefits of holding both:
- ~350–400 total quality dividend-paying companies
- SCHD provides income focus; VIG provides quality/growth focus
- VIG’s tech exposure diversifies SCHD’s industrials/financials tilt
- Combined yield approximately 2.5%–3.0% — a balance of income and growth
Internal Links
- SCHD ETF 2026 Review
- VIG ETF 2026 Review
- SCHD vs. VYM: high yield comparison
- SCHB ETF 2026 Review
- Charles Schwab investing hub
- How to open a Schwab account
Bottom Line
SCHD wins on income — higher current yield, faster dividend growth, stronger historical total returns. VIG wins on quality breadth and lower volatility — 300+ stocks, 10+ consecutive years of dividend increases required, and meaningful tech exposure. For most income-focused investors, SCHD is the stronger dividend ETF choice. For more conservative investors who want lower volatility and broader diversification, VIG is compelling. Many experienced dividend investors hold both — using SCHD for income and VIG for quality stability.
This article is for educational purposes only and does not constitute personalised investment advice. All investments carry risk, including the possible loss of principal.
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