Updated Reviewed quarterly
SCHD vs VYM: Dividend ETF Comparison
SCHD
TER 0.06% · Yield 3.5% · Quarterly
VYM
TER 0.06% · Yield 3.0% · Quarterly
Two dividend ETFs with different approaches. Compare their strategies, yields, and holdings.
Quick Summary
SCHD has historically delivered higher total returns than VYM due to its quality focus and dividend growth criteria, though past performance does not guarantee future results. VYM offers more diversification (500+ stocks vs 100). These ETFs use different strategies and have different risk profiles.
The Key Difference
SCHD - Quality + Growth
Selects companies based on:
- ✓ 10+ years of dividend payments
- ✓ Financial strength metrics
- ✓ Dividend growth potential
- ✓ Only 100 carefully selected stocks
VYM - Yield Focus
Selects companies based on:
- ✓ Above-average dividend yield
- ✓ No quality screens
- ✓ Broad market coverage
- ✓ 500+ stocks for diversification
Head-to-Head Comparison
| Feature | SCHD | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 0.06% | 0.06% | Tie |
| Dividend Yield | ~3.5% | ~3.0% | SCHD |
| Holdings | 100 | 500+ | VYM |
| 5-Year Total Return | ~70% | ~50% | SCHD |
| Dividend Growth | ~12%/year | ~6%/year | SCHD |
| Quality Screen | Yes | No | SCHD |
How Their Strategies Differ
SCHD's quality screens are designed to filter out "dividend traps" — companies with high yields that may cut their dividends. VYM selects primarily on yield, resulting in broader but less filtered exposure.
SCHD's dividend growth requirement means holdings tend to be companies with strong cash flows and sustainable payout ratios. However, past strategy performance may not continue.
For New Zealand Investors
Platform Availability
Both SCHD and VYM available on Hatch, Stake, Sharesies, and Interactive Brokers.
Tax on Dividends
Both pay quarterly dividends subject to 15% US withholding tax (with W-8BEN). Higher yield = more withholding, so SCHD's 3.5% yield means slightly more withheld than VYM's 3.0%.
FIF Considerations
If your foreign investments exceed $50,000 NZD, both are subject to FIF rules. Higher total returns (SCHD) may result in slightly higher FIF tax under the CV method.
Key Differences
SCHD Characteristics
- 100 quality-screened dividend stocks
- Focuses on dividend growth (~12%/yr historically)
- More concentrated, potentially more volatile
VYM Characteristics
- 500+ stocks for broad diversification
- Selects on above-average yield
- Vanguard structure
These are general product characteristics, not recommendations. Consult a licensed financial adviser to assess suitability for your circumstances.
Many investors hold both — SCHD for quality and VYM for broader coverage.
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