SCHD Dividend Analysis: Yield Growth and History
SCHD is the most popular dividend ETF. Here is a deep dive into its strategy, yield, growth rate, and how it fits your portfolio.
Don't have time? Here's what you need to know:
- 1SCHD holds 100 quality dividend stocks screened for financial strength, yield, and growth
- 23.5% yield with 12% annual dividend growth — income roughly doubles every 6 years
- 3Lower P/E than the S&P 500 provides a margin of safety and value tilt
- 4Use as 20-30% of portfolio alongside VTI; hold in Roth IRA for tax-free dividend compounding
What Makes SCHD Special
SCHD (Schwab U.S. Dividend Equity ETF) holds 100 stocks selected for: (1) at least 10 consecutive years of dividend payments, (2) high cash flow to total debt ratio, (3) high return on equity, (4) above-average dividend yield, (5) 5-year dividend growth rate. This multi-factor screen produces a portfolio of financially strong companies that pay above-average, growing dividends.
The result: a 3.5% yield (vs S&P 500's 1.3%) from quality companies like Broadcom, Merck, Home Depot, Coca-Cola, and Verizon. The 5-year dividend growth rate is approximately 12% — meaning the income you receive roughly doubles every 6 years.
SCHD by the Numbers
SCHD trades at a lower P/E than the S&P 500, reflecting its value tilt toward mature, cash-generating businesses. The lower valuation provides a margin of safety: you pay less per dollar of earnings, which historically produces better risk-adjusted returns.
| Metric | SCHD | S&P 500 (VOO) | VYM |
|---|---|---|---|
| Yield | ~3.5% | ~1.3% | ~3.0% |
| 5-Year Dividend Growth | ~12%/yr | ~6%/yr | ~6%/yr |
| Expense Ratio | 0.06% | 0.03% | 0.06% |
| Holdings | 100 | 500 | 450+ |
| Top Sectors | Tech, Healthcare, Financials, Consumer Staples | Tech-heavy (30%+) | Financials, Healthcare, Energy |
| P/E Ratio | ~15 | ~22 | ~14 |
How to Use SCHD in Your Portfolio
The most popular approach: 70-80% VTI (broad market core) + 20-30% SCHD (dividend growth satellite). VTI captures growth stocks (Amazon, Google, Tesla) that SCHD excludes because they pay no dividends. SCHD adds quality, income, and a value tilt. Together, they cover the full market while tilting toward income.
In a Roth IRA, SCHD's growing dividends compound tax-free. In a taxable account, SCHD's qualified dividends are taxed at the favorable 0-20% rate. Either placement works.
Tip: SCHD reconstitutes annually in March. It drops companies that no longer meet quality screens and adds ones that do. This automatic quality maintenance is one reason SCHD outperforms naive high-yield strategies that hold onto declining companies.
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Frequently Asked Questions
Is SCHD better than VOO?
Different tools, different jobs. VOO gives you the entire S&P 500 at the lowest cost — maximum diversification. SCHD gives you 100 quality dividend growers with higher yield and a value tilt. VOO has outperformed SCHD in recent years thanks to tech stocks. SCHD outperformed in 2022. A mix of both is ideal.
Can SCHD's dividend growth rate continue at 12%?
12% is historically high and will likely moderate to 6-8% as the economy normalizes. Even at 8%, SCHD's dividends double every 9 years — still compelling for income growth investors.
SCHD or VIG for dividend growth?
SCHD has higher yield (3.5% vs 1.8%) and faster recent dividend growth (12% vs 10%). VIG has more holdings (300+ vs 100) and slightly lower concentration risk. For most investors, SCHD's combination of yield and growth makes it the better choice.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.