DGROvsSCHD

DGRO and SCHD are both Tier 2 dividend ETFs — conservative, quality-oriented, appropriate for tax-advantaged and taxable accounts alike. DGRO currently yields approximately 2.0% while SCHD yields approximately 3.3%. The real question is whether you want more breadth (DGRO's 500 holdings) or more yield quality with higher current income (SCHD's 100-holding quality screen).

Index Construction: The Core Difference

DGRO's Morningstar Methodology

DGRO tracks the Morningstar US Dividend Growth Index, which screens for companies with at least 5 consecutive years of dividend growth, a payout ratio below 75% (ensuring dividends are sustainable), and positive earnings expectations. The result is roughly 500 holdings spread across sectors including technology — SCHD largely excludes tech due to yield requirements, but DGRO captures dividend-paying tech names like Apple and Microsoft.

SCHD's Dow Jones Discipline

SCHD's 10-year consecutive dividend requirement is more stringent than DGRO's 5-year bar, immediately eliminating any company that cut or froze dividends in the past decade. Combined with scoring on cash flow, ROE, and 5-year dividend growth, SCHD ends up with a more selective, mature portfolio of dividend payers — and a higher current yield reflecting that maturity.

Tech Exposure

This is where the ETFs diverge most notably. DGRO holds dividend-paying tech giants, giving you exposure to one of the market's most productive sectors. SCHD's yield requirement excludes most tech names. If you believe technology will continue to dominate market returns, DGRO's tech inclusion is a meaningful advantage.