Schwab vs. Vanguard: Which Dividend ETF Is Best for Your Portfolio?

Comparing Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD) and Vanguard High Dividend Yield ETF (NYSEMKT:VYM) reveals 2 low-cost income powerhouses with chiseled approaches to portfolio attraction and yield.

Income investors often gravitate toward these 2 funds for their rock-bottom fees and absorption connected seasoned, dividend-paying companies. While some question to supply dependable currency flow, they disagree successful however they surface for prime and however galore idiosyncratic stocks they yet hold.

Snapshot (cost & size)

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

The funds person beauteous comparable disbursal ratios. However, Schwab's ETF presently offers a higher payout, with a output spread of 1.1 percent points.

Performance & hazard examination

What's wrong

The Schwab ETF focuses connected 103 holdings, creating a much concentrated portfolio than galore of its peers. Its largest positions see UnitedHealth Group (NYSE:UNH) astatine 4.5%, Merck (NYSE:MRK) astatine 4.45%, and Home Depot (NYSE:HD) astatine 4.42%. The money is chiefly weighted toward exertion (19%), user antiaircraft (18%), and healthcare (18%). It was launched successful 2011. The ETF has paid $1.05 per stock implicit the trailing 12 months.

Vanguard's money offers broader diversification done 605 holdings. Its largest positions see Broadcom (NASDAQ:AVGO) astatine 8.52%, JPMorgan Chase (NYSE:JPM) astatine 3.15%, and ExxonMobil (NYSE:XOM) astatine 2.53%. The portfolio spans exertion (20%), fiscal services (20%), and healthcare (12%). It was launched successful 2006. The Vanguard ETF has paid $3.63 per stock implicit the trailing 12 months.

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What this means for investors

These 2 dividend specialists stock immoderate commonalities. Assets nether absorption are astir identical, and their disbursal ratios are precise close. (I americium not going to quibble astir a 2-basis-point difference.)

Where they diverge successful a important mode is their fig of holdings. VYM has much than 600 positions, portion SCHD has 103. However, I similar that nary of the stocks successful SCHD transcend a 5% weighting. (Admittedly, successful Vanguard's ETF, lone 1 banal goes supra that threshold.)