When it comes to choosing the right ETF for dividend investors, VYM and SCHD are two popular options to consider. Both of these ETFs offer exposure to dividend-paying stocks, but they have some key differences that investors should be aware of.
VYM, which stands for Vanguard High Dividend Yield ETF, tracks the performance of the FTSE High Dividend Yield Index. This index includes stocks of companies that have a history of paying high dividends. On the other hand, SCHD, or Schwab US Dividend Equity ETF, follows the Dow Jones U.S. Dividend 100 Index. This index focuses on high-quality dividend-paying stocks with a record of consistent dividend payments.
One of the main differences between VYM and SCHD is their expense ratios. VYM has an expense ratio of 0.06%, while SCHD’s expense ratio is slightly higher at 0.06%. This means that VYM is slightly cheaper to own than SCHD, which can be an important factor for some investors.
Another key difference between the two ETFs is their dividend yield. VYM currently has a dividend yield of around 3.4%, while SCHD’s dividend yield is slightly lower at 3.1%. This means that investors looking for higher dividend payments may prefer VYM over SCHD.
In terms of performance, both VYM and SCHD have delivered solid returns for investors over the years. However, VYM has outperformed SCHD in terms of total returns over the past decade. This could be due to VYM’s focus on high dividend-paying stocks, which have historically outperformed the broader market.
Ultimately, the choice between VYM and SCHD will depend on individual investor preferences. Those looking for a lower expense ratio and higher dividend yield may prefer VYM, while investors seeking consistent dividend payments and solid performance may lean towards SCHD. It’s important to carefully consider your investment goals and risk tolerance before choosing between these two ETFs.