Is SCHD a Good ETF? Here's What the Data Says

SCHD has become one of the most talked-about ETFs in the dividend investing community. But does it live up to the hype? We dug into the data — the holdings, the returns, the dividend growth, and the weaknesses — so you can decide for yourself.

What Is SCHD?

SCHD stands for Schwab US Dividend Equity ETF. Launched in November 2011 by Charles Schwab, it tracks the Dow Jones US Dividend 100 Index. The fund holds approximately 100 US stocks that have been selected for both their dividend track record and their financial quality. With roughly $60 billion in assets under management, SCHD has grown from a niche fund into one of the largest dividend ETFs in the country.

The expense ratio is just 0.06% — meaning you pay $6 per year for every $10,000 invested. That's essentially free.

SCHD by the Numbers

How SCHD Picks Its Stocks

This is where SCHD separates itself from basic high-yield ETFs. The Dow Jones US Dividend 100 Index doesn't just grab the highest-yielding stocks and call it a day. It applies a rigorous multi-step selection process:

Step 1 — Dividend history: A company must have paid dividends for at least 10 consecutive years. This filter alone eliminates most of the market.

Step 2 — Quality screens: Companies are then ranked on four fundamental factors: cash flow to total debt (financial strength), return on equity (profitability), dividend yield (current income), and 5-year dividend growth rate (income trajectory).

Step 3 — Selection and weighting: The top 100 companies that pass these screens are included and weighted by modified market capitalization. The index is reconstituted annually.

The result is a portfolio of financially healthy, profitable companies with a proven commitment to paying and growing their dividends. Typical top holdings include names like Cisco, Broadcom, Merck, Home Depot, Coca-Cola, PepsiCo, and Verizon — blue-chip companies with strong balance sheets.

Performance: SCHD vs. the S&P 500

One of the most impressive things about SCHD is that it has largely kept pace with the broader market while paying a significantly higher dividend. Here's an approximate comparison of total returns (price appreciation plus reinvested dividends):

The S&P 500 has outperformed SCHD over the last decade in total return terms, largely due to the massive tech rally (SCHD underweights tech). But SCHD's total return of roughly 10–12% annualized is still excellent by any standard — and it delivered a much higher income stream along the way. Use our Stock Comparison tool to run your own side-by-side analysis.

Dividend Growth: SCHD's Secret Weapon

Where SCHD truly shines is dividend growth. Since its inception in 2011, SCHD has raised its annual dividend payout substantially. The fund's 5-year dividend growth rate has consistently been in the high single digits to low double digits. This means that an investor who bought SCHD years ago is earning a much higher yield on their original investment (known as "yield on cost") than someone buying today.

For example, if you bought SCHD five years ago at around $55 per share and the annual dividend has grown from roughly $1.90 to roughly $2.70, your yield on cost would be approximately 4.9% — significantly higher than the current yield of ~3.5%. That's the power of dividend growth compounding over time.

SCHD's Weaknesses

No ETF is perfect, and SCHD has some notable limitations:

Underweight technology: Because many high-growth tech companies either don't pay dividends or haven't paid them for 10+ years, SCHD naturally underweights the technology sector. During periods when tech dominates (like 2020–2024), SCHD lags the S&P 500.

No international exposure: SCHD only holds US stocks. If international markets outperform, you'll miss out entirely. Many financial advisors recommend complementing SCHD with an international fund.

Value tilt: The quality and dividend screens naturally push SCHD toward value-oriented companies. This is great during value rallies but can be a drag during growth-driven markets.

Concentrated portfolio: With only ~100 holdings, SCHD is more concentrated than something like VYM (~450 holdings). A few bad performers can have a noticeable impact on the fund.

SCHD vs. VYM vs. VOO

This is the comparison most people want to make, so let's be direct:

SCHD vs. VYM: SCHD offers higher yield (~3.5% vs ~3.0%), stronger quality screens, and better dividend growth. VYM offers broader diversification (~450 vs ~100 holdings) and lower concentration risk. If you want quality and growth, go SCHD. If you want breadth and safety, go VYM.

SCHD vs. VOO: VOO tracks the entire S&P 500 and has delivered higher total returns over the last decade, driven by tech. But VOO only yields about 1.3%. If you want maximum growth and don't need income, VOO is the better choice. If you want meaningful dividend income that grows over time, SCHD wins.

Many investors hold both — VOO for total market growth and SCHD for dividend income. That's a perfectly reasonable strategy.

Who Should Buy SCHD?

SCHD is ideal for investors who want a growing income stream from high-quality US companies without paying high fees. It's particularly well-suited for people building a dividend portfolio in a Roth IRA (where dividends grow tax-free) or for those approaching retirement who want reliable income.

It's not the best choice if you want pure growth (buy VOO), if you want the highest yield right now (look at SPYD), or if you need international diversification (add VXUS).

Track your SCHD dividends and model your income projections with our Dividend Tracker.

The Bottom Line

Is SCHD a good ETF? The data says yes — emphatically. A rock-bottom expense ratio of 0.06%, a solid ~3.5% yield, excellent dividend growth, rigorous quality screens, and a 10-year annualized total return that competes with the broader market. It's not perfect (nothing is), but for dividend-focused investors, SCHD is one of the best tools available. The hype is deserved.