SCHDvsVYM

SCHD and VYM represent two philosophies within dividend investing: quality-first concentration versus broad-market yield. Both charge just 0.06% expense ratios and are Tier 2 (Yield Plus) in DivAgent's Risk Spectrum — but their construction methodologies create meaningfully different portfolios.

Methodology: Where the Difference Lives

SCHD's Quality Screen

SCHD tracks the Dow Jones U.S. Dividend 100 Index, which requires at least 10 consecutive years of dividend payments, then scores companies on cash flow to debt, ROE, dividend yield, and 5-year dividend growth rate. The result is roughly 100 high-conviction, financially healthy dividend payers. The screen explicitly avoids REITs and MLPs.

VYM's Broad-Market Approach

VYM tracks the FTSE High Dividend Yield Index, which simply captures above-average dividend-yielding US stocks — around 400-500 names. The broader net catches more companies, including REITs and utilities, but without SCHD's quality filters. You get more diversification at the cost of including some lower-quality dividend payers.

Historical Performance

Since SCHD's 2011 inception, it has outperformed VYM on total return by approximately 1-2% annually — meaningful compounding over a decade. SCHD has also grown its dividend per share at roughly double VYM's rate. In bear markets, both declined similarly, confirming that dividend investing doesn't fully protect against drawdowns.