The Best Dividend ETF to Buy: SCHD Pays a High Yield While VIG Focuses on Dividend Growth

2 months ago 81

Neha Chamaria, The Motley Fool

Sun, December 21, 2025 astatine 11:38 AM CST 6 min read

The Vanguard Dividend Appreciation ETF and the Schwab U.S. Dividend Equity ETF Income are among the apical dividend ETFs to gain years of passive income.
SCHD offers a overmuch higher dividend output but trails VIG successful caller full returns.
VIG has broader diversification with implicit 3 times arsenic galore holdings and focuses connected dividend growth.
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The Vanguard Dividend Appreciation ETF (NYSEMKT:VIG) and the Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD) are some dividend-focused exchange-traded funds (ETFs), targeting U.S. companies with a beardown grounds of paying dividends. Their approaches and assemblage exposures, however, diverge meaningfully successful presumption of yield, assemblage tilt, and portfolio breadth, with VIG offering wider diversification and SCHD providing a higher income payout.

The examination beneath breaks down however these funds stack up connected cost, performance, risk, and portfolio operation to assistance investors determine which whitethorn amended acceptable their goals.

Metric

VIG

SCHD

Issuer	Vanguard	Schwab
Expense ratio	0.05%	0.06%
1-yr full instrumentality (as of Dec. 19, 2025)	14.9%	6%
Dividend yield	1.6%	3.8%
Beta	0.79	0.73
AUM	$120.4 billion	$72.5 billion

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year play returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

Both funds are low-cost, with SCHD charging conscionable a hairsbreadth more, but SCHD stands retired for its overmuch higher dividend output and could perchance entreaty to those prioritizing income implicit caller full returns.

Metric

VIG

SCHD

Max drawdown (5 y)	(20.4%)	(16.8%)
Growth of $1,000 implicit 5 years (in presumption of full returns)	$1,721	$1,530

The Schwab U.S. Dividend Equity ETF holds a 14.2-year way record. The ETF tracks the Dow Jones U.S. Dividend 100 Index, focusing connected 103 high-yielding, high-quality U.S. stocks. Its assemblage premix is heavy weighted towards vigor (19.3%), user antiaircraft (18.5%), and healthcare (16.1%). Top holdings see Merck & Co (NYSE:MRK), Amgen (NASDAQ:AMGN), and Cisco Systems (NASDAQ:CSCO). This concentrated attack whitethorn entreaty to those seeking a targeted, income-oriented portfolio.

The Vanguard Dividend Appreciation ETF tracks the S&P U.S. Dividend Growers Index, which comprises stocks that person raised their dividends for astatine slightest 10 consecutive years. It's a immense portfolio of 338 stocks, with an accent connected large-cap firms that person a accordant past of dividend growth. Its assemblage vulnerability is tilted toward exertion (27.8%), fiscal services (21.4%), and healthcare (16.7%), with large positions successful Broadcom (NASDAQ:AVGO), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL). The broader diversification and tech tilt whitethorn pull growth-minded investors.