Conclusion – ETF with a High Dividend Yield The fund is a buy because of its diverse holdings, great dividend growth track record, and fairly strong performance. SCHD is especially well-suited to long-term dividend growth investors, since the stock is expected to pay out significant, increasing dividends in the next years.
Vym or SCHD: which is better?
- Schwab’s SCHD and Vanguard’s VYM are two prominent dividend-yield-focused ETFs, respectively.
- Both are extremely popular and have a sizable AUM, but VYM has a tiny lead over SCHD.
- SCHD uses profitability screening to find high-quality firms with a long-term dividend.
- VYM is made up of equities with higher-than-average dividend yields, excluding REITs. It is unconcerned with the quality of the product.
- Since its start in 2011, SCHD has delivered a better return than VYM while maintaining a similar level of volatility.
- SCHD, as one might assume, has a substantially higher exposure to the Profitability risk factor.
- Dividend investment is mostly based on the factors of Value, Profitability, and Investment, with some naive exposure to the others.
Is SCHD a suitable dividend ETF to invest in?
SCHD is one of the cheapest dividend ETFs available, with annual fees of just 0.06 percent, or $6 for every $10,000 invested. It does not, however, shortchange investors in terms of yield, as it offers a higher yield than the previous funds. This higher yield is obtained by a more focused selection of only 100 or so total stocks, but it’s worth noting that it’s not as top-heavy as some of the previous funds, which may have more overall components but are significantly weighted toward the top 10 or 15 stocks. No single stock is worth more than roughly 4 percent of the portfolio of SCHD at present to guarantee the risk profile isn’t rising up dramatically even if the yield is.
Schd is a sort of mutual fund.
SCHD is a market-cap-weighted fund that exclusively invests in companies that have paid dividends for at least ten years. Within that universe, SCHD builds its portfolio using fundamental screens (cash-flow to debt ratio, return on equity, dividend yield, and dividend growth rate).
What is the dividend paid by Schd?
The most recent quarterly dividend payment of $0.4419 per share was given to shareholders of the Schwab US Dividend Equity ETF on Monday, March 30, 2020.
Is Vym superior to VOO?
- The FTSE High Dividend Yield Index is tracked by VYM. The S&P 500 Index is followed by VOO. The CRSP US Total Market Index is followed by VTI.
- As a result, VYM is primarily comprised of large-cap dividend stocks in the United States (all Value, no Growth), VOO is comprised of large-cap stocks in the United States (both Growth and Value), and VTI is comprised of VOO plus small- and mid-cap firms.
- Since VYM’s launch in 2006, VOO and VTI have consistently outperformed VYM. To be fair, the Value premium has suffered a lot over that time. VTI and VOO have had roughly equal historical performance.
- VYM is likely unsuitable as a key position in a well-diversified investing portfolio.
Is Schd under active supervision?
Though this is a passively managed fund, the team has touched it a lot recently. On 7/31/20, Schwab reported a turnover percentage of 44.12 percent. This is significantly higher than what you’ll get in other passively managed ETFs, such as SCHD’s dividend counterparts. This, I feel, is a benefit for SCHD, since it makes it significantly more agile and adaptable to changes in a dynamic and unprecedented market.
Just looking at the top ten holdings since last year, SCHD has totally exited Intel (INTC) and Home Depot (HD), while Exxon Mobile (XOM) is no longer a top ten position. All of these were in the top ten, with HD and INTC coming in first and third, respectively.
I believe that exiting INTC was a wise decision, as it likely maintained a significant portion of the fund’s capital gains. Reducing the XOM weighting is a bit of a no brainer as far as I am concerned as well. I would be very dubious to get involved in a fund that owned XOM in its top 10, or any more than 3.5 percent . I’m skeptical of XOM’s capacity to grow at all in any timeframe, and I believe the dividend is being paid on borrowed time. I’m not thrilled with the 3.2 percent weighting it has in SCHD, and I’d want to see it decreased even more in future rebalancing. I’m likewise not convinced about the transition away from HD. I’d prefer to see the position cut, but I’m not going to quarrel with the results.
In general, a high turnover rate like this isn’t something all investors want to see, and I wouldn’t either, but in this environment, I’m delighted to see a passive fund managed so actively. This, I believe, aids in the preservation of my income and growth, and the proof, as they say, is in the pudding. Regarding the high turnover rate, I believe it is a good idea to keep SCHD in a tax-advantaged account wherever available.