• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Optimized Portfolio

Investing and Personal Finance

  • Beginners Start Here
  • Investing 101
    • Beginners Start Here – 10 Steps To Start Building Wealth
    • What Is the Stock Market? How It Works & How to Invest in It
    • How To Invest in an Index Fund – The Best Index Funds
    • Portfolio Asset Allocation by Age
    • How To Invest Your Emergency Fund
    • Portfolio Diversification – How To Diversify Your Portfolio
    • Dollar Cost Averaging vs. Lump Sum Investing (DCA vs. LSI)
    • How To Invest Your HSA (Health Savings Account)
    • Factor Investing and Factor ETFs – The Ultimate Guide
    • more…
  • Lazy Portfolios
    • All Weather Portfolio
    • Bogleheads 3 Fund Portfolio
    • HEDGEFUNDIE’s Excellent Adventure
    • Warren Buffett Portfolio
    • Golden Butterfly Portfolio
    • Paul Merriman Ultimate Buy and Hold Portfolio
    • Ben Felix Model Portfolio
    • Permanent Portfolio
    • David Swensen Portfolio
    • 60/40 Portfolio
    • more…
  • Brokerage Reviews
    • The 5 Best Stock Brokers
    • The 4 Best Investing Apps
    • M1 Finance Review
    • Brokers with the Lowest Margin Rates
    • M1 Finance vs. Fidelity
    • M1 Finance vs. Vanguard
    • Webull vs. Robinhood
    • Stash vs. Robinhood
    • M1 Borrow Review (How M1’s Margin Loan Works)
    • more…
  • ETFs
    • VOO vs. VTI – Vanguard S&P 500 or Total Stock Market ETF?
    • The 7 Best International ETFs
    • The 8 Best Small Cap ETFs (4 From Vanguard)
    • The 5 Best REIT ETFs
    • The 5 Best EV ETFs – Electric Vehicles ETFs
    • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s
    • The Best Vanguard Dividend Funds – 4 Popular ETFs
    • The 5 Best Tech ETFs
    • The 7 Best Small Cap Value ETFs
    • The 6 Best ETFs for Taxable Accounts
    • The 5 Best Emerging Markets ETFs (1 From Vanguard) for 2022
    • more…
  • Leverage
    • What Is a Leveraged ETF and How Do They Work?
    • How To Beat the Market Using Leverage and Index Investing
    • The 9 Best Leveraged ETFs
    • Hedgefundie’s Excellent Adventure
    • Leveraged All Weather Portfolio
    • Leveraged Permanent Portfolio
    • Leveraged Golden Butterfly Portfolio
    • NTSX – Review and Summary
    • TQQQ – Is It A Good Investment?
    • PSLDX – A Review
    • SWAN – A Review
    • RPAR Risk Parity ETF Review
    • more…
  • Dividends
    • The Best M1 Finance Dividend Pie
    • The 11 Best Dividend ETFs
    • The Best Vanguard Dividend Funds – 4 Popular ETFs
    • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s
    • 8 Reasons Why I’m Not a Dividend Income Investor
    • QYLD – A Harsh Review
    • more…
  • Bonds
    • The Best Vanguard Bond Funds – 11 Popular ETFs
    • The 11 Best Treasury Bond ETFs
    • Treasury Bonds vs. Corporate Bonds
    • The 3 Best TIPS ETFs
    • The 5 Best High Yield Bond Funds for Income
    • The 3 Best Municipal Bond ETFs
    • How To Buy Bonds Online: The Ultimate Guide
    • The Best Bond Funds Out There – 13 ETFs
    • The 3 Best Corporate Bond ETFs
    • more…

SPYD vs. SCHD – SPDR Dividend ETF vs. Schwab Dividend ETF

Last Updated: June 26, 2022 No Comments – 3 min. read

Two popular dividend-focused ETFs are SPYD, the SPDR Portfolio S&P 500 High Dividend ETF, and SCHD, the Schwab U.S. Dividend Equity ETF. Let’s compare them.

First, note that I don’t chase dividends. But I recognize that many investors use dividends to supplement their current income, particularly in retirement. Others just irrationally prefer dividend-paying stocks. I even designed a dividend-focused portfolio for income investors. In any case, these two funds are very popular and take a pretty different approach. Here we’ll review these dividend ETFs and explore the differences between them.

Disclosure:  Some of the links on this page are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality, ad-free content on this site and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. Read more here.

In a hurry? Here are the highlights:

  • SPYD and SCHD are two popular dividend-oriented ETFs from SPDR and Schwab, respectively.
  • SPYD launched in 2015 and SCHD launched in 2011.
  • SPYD costs a tiny bit more at 7 bps, while SCHD costs 6 bps.
  • Both are very popular and have significant AUM, but SCHD is more popular than SPYD.
  • SPYD captures the highest-yielding stocks in the S&P 500.
  • SCHD looks for high-quality companies with a sustainable dividend via profitability screens.
  • SPYD overweights Energy, Utilities, and REITs and all but excludes Industrials, Technology, and Consumer Cyclical stocks.
  • SCHD overweights Financials, Industrials, and Consumer Staples, excludes REITs entirely, and nearly excludes Utilities.
  • Since SPYD’s inception in 2015, SCHD has massively outperformed it on both a general and risk-adjusted basis.
  • SPYD delivers greater exposure to the Size and Value equity risk factors. Profitability and Investment exposures are roughly equal between the two funds.
  • SPYD has a higher yield at 3.99%, compared to 3.43% for SCHD.

Contents

  • SPYD vs. SCHD – Methodology
  • SPYD vs. SCHD – Sector Composition
  • SPYD vs. SCHD – Performance Backtest
  • SPYD vs. SCHD – Conclusion

SPYD vs. SCHD – Methodology

SPYD launched in 2015. It is the SPDR Portfolio S&P 500 High Dividend ETF. As the name suggests, SPYD is comprised of a basket of high yield stocks from the S&P 500. Appropriately, SPYD tracks the S&P 500 High Dividend Index. This index simply takes the 80 highest-yielding stocks from the S&P 500 Index and equally weights them. Easy enough. This makes SPYD particularly attractive to yield chasers.

SCHD is the Schwab U.S. Dividend Equity ETF. It launched in 2011. The fund seeks to track the Dow Jones U.S. Dividend 100™ Index, which is comprised of 100 stocks with at least 10 consecutive years of dividend payments and a minimum market cap of $500 million. Stocks are then selected for the index by screening for yield, profitability and cash flow metrics, and projected dividend growth, excluding REITs. Individual companies are capped at 4% and sectors are capped at 25%.

SPYD and SCHD have an overlap of only about 24%. This is illustrated more clearly in the very different sector weightings below.

In terms of factor exposure, SPYD tilts smaller than SCHD and provides appreciable exposure across Value, Investment, and Profitability. SCHD provides similar loadings on Profitability Investment but a much smaller loading on Value and a negative loading on Size.

SPYD and SCHD both have significant assets, but SPYD is more expensive by 1 basis point at 0.07%, versus 0.06% for SCHD.

Yield chasers may appreciate SPYD’s higher yield by about half a percent. At the time of writing, SPYD has a dividend yield of 3.99%, compared to 3.43% for SCHD.

SPYD vs. SCHD – Sector Composition

SPYDSCHD
Basic Materials4.1%2.8%
Consumer Staples11.2%14.7%
Consumer Discretionary2.6%7.5%
Financials14.0%19.6%
Healthcare11.6%13.1%
Industrials1.0%15.8%
Energy17.0%5.9%
Technology2.5%14.9%
Telecommmunications5.8%5.4%
Utilities18.3%0.4%
Real Estate12.0%0.0%

Notice how SPYD is highly concentrated in just a handful of sectors that are notorious for high yields like REITs, Utilities, Energy, and Financials. SCHD is concentrated in other sectors like Industrials and Technology which are all but absent from SPYD. SCHD also excludes REITs entirely.

SPYD vs. SCHD – Performance Backtest

Here’s a performance backtest of SPYD and SCHD going back to SPYD’s inception in 2015 through 2021:

spyd vs schd performance
Source: PortfolioVisualizer.com

During that time, SPYD has severely lagged SCHD on both a general and risk-adjusted basis. Also notice the much larger max drawdown for SPYD from the March 2020 crash and its considerably greater volatility compared to SCHD.

SPYD vs. SCHD – Conclusion

If you’re solely focused on yield and/or prefer to massively overweight Utilities, REITs, and Energy relative to both SCHD and the broader market, SPYD may be of use. If instead you want to make sector bets on Financials and Industrials while maintaining the appreciable tech exposure similar to the market, go with SCHD.

In any case, in my opinion, neither of these funds is perfectly suitable as a core holding in a well-diversified portfolio. Moreover, if one wants to target the factor exposure that explains returns between diversified portfolios, you may be better off simply using funds that directly target those factors.

Conveniently, both SPYD and SCHD should be available at any major broker, including M1 Finance, which is the one I’m usually suggesting around here.

Do you own either of these dividend funds in your portfolio? Let me know in the comments.


Disclaimer:  While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.

m1 finance get started


Don't want to do all this investing stuff yourself or feel overwhelmed? Check out my flat-fee-only fiduciary friends over at Advisor.com.

77 percent of millenials report their finances are a source of anxiety

Related Posts

  • How To Write an Investment Policy Statement – Template & Example
  • VYM ETF Review – Is VYM a Good Investment? (Dividend Stocks)
  • 8 Reasons Why I’m Not a Dividend Income Investor
  • JL Collins Simple Path To Wealth Portfolio Review & ETFs
  • Frank Armstrong Ideal Index Portfolio Review and ETF’s

About John Williamson

Analytical and entrepreneurial-minded data nerd, usability enthusiast, Boglehead, and Oxford comma advocate. I lead the Paid Search marketing efforts at Gild Group. I'm not a big fan of social media, but you can find me on LinkedIn and Reddit.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Sign up to receive email updates when a new post is published.

Don't worry, I hate spam too. No ads.

  • Facebook
  • Instagram
  • Reddit
  • Twitter
  • YouTube

Most Popular

Ray Dalio All Weather Portfolio Review, ETF’s, & Leverage

HEDGEFUNDIE’s Excellent Adventure (UPRO/TMF) – A Summary

Golden Butterfly Portfolio Review and M1 Finance ETF Pie

David Swensen Portfolio (Yale Model) Review and ETFs To Use

Harry Browne Permanent Portfolio Review, ETFs, & Leverage (2022)

Corporate Bonds vs. Government Bonds (Treasuries) – The Showdown

VIG vs. VYM – Vanguard’s 2 Popular Dividend ETFs (Review)

Warren Buffett ETF Portfolio (90/10) Review and ETFs (2022)

The 60/40 Portfolio Review and ETF Pie for M1 Finance

Bogleheads 3 Fund Portfolio Review and Vanguard ETFs To Use

m1 sidebar

visor sidebar

Paul Merriman Ultimate Buy and Hold Portfolio Review, M1 Pie (2022)

Lowest Margin Rates Brokers (2022 Comparison)

M1 Finance vs. Vanguard Brokerage Comparison [2022 Review]

M1 Finance vs. Fidelity Brokerage Comparison [2022 Review]

The Best M1 Finance Dividend Pie for FIRE & Income Investors

Portfolio Asset Allocation by Age – Beginners To Retirees

The 5 Best Stock Brokers Online for Investing (2022 Review)

The 4 Best Investing Apps for Beginners (2022 Review)

The 7 Best Small Cap ETFs (3 From Vanguard) for 2022

The 6 Best REIT ETFs To Invest in Real Estate for 2022

The 6 Best Tech ETFs To Buy Tech Stocks in 2022

9 Best Clean Energy ETFs To Go Green in Your Portfolio (2022)

The 12 Best Small Cap Value ETFs (3 From Vanguard) for 2022

Why, How, & Where To Invest Your Emergency Fund To Beat Inflation

VOO vs. VTI – Vanguard’s S&P 500 and Total Stock Market ETFs

9 Best International ETFs To Buy (6 From Vanguard) in 2022

Ben Felix Model Portfolio (Rational Reminder, PWL) ETFs & Review

Factor Investing and Factor ETFs – The Ultimate Guide

Gone Fishin’ Portfolio Review (Alexander Green) & ETFs (2022)

TQQQ – Is It A Good Investment for a Long Term Hold Strategy?

Recent Posts

VXUS vs. IXUS – Vanguard or iShares International ETF?

Tail Risk – What It Is and How To Hedge Against It

I Bonds (U.S. Government Savings Bonds) – The Ultimate Guide

JEPI ETF Review – JPMorgan Equity Premium Income ETF

Sharpe Ratio vs. Sortino vs. Calmar – Risk Adjusted Return

Investing Risk Explained (My Take on Portfolio Risk & Volatility)

HNDL ETF Review – Is HNDL a Good Investment? (7HANDL™ ETF)

NUSI ETF Review – An Income-Focused Option Collar ETF

3 Best SPAC ETFs To Invest in SPACs in 2022 – But Should You?

VOO vs. VOOV vs. VOOG – Vanguard S&P 500, Value, or Growth?

VXUS vs. VEU – Which Vanguard Total International ETF?

VT vs. VTI – Global Stock Market vs. Total U.S. Stock Market

RPAR Risk Parity ETF Review – An All Weather Portfolio ETF?

PSLDX – A Review of the PIMCO StocksPLUS® Long Duration Fund

The 7 Best Value ETFs To Capture Value Stocks in 2022

View All...

Footer

  • Facebook
  • Instagram
  • Reddit
  • Twitter
  • YouTube

Amazon Affiliate Disclosure

OptimizedPortfolio.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Email Newsletter

Sign up to receive email updates when a new post is published.

Don't worry, I hate spam too. No ads.

About - My Toolbox - Privacy - Terms - Contact


Copyright © 2022 OptimizedPortfolio.com

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Ok, Got ItReject Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT