VYM vs SCHD: 570 Stocks vs 100 — A Surprising Winner (2026)

VYM and SCHD are the two most popular dividend ETFs in the United States. VYM charges just 0.04% after Vanguard’s February 2026 fee cut; SCHD charges 0.06%. Both pay quarterly. Both target high-quality dividend stocks. And both show up in every “best dividend ETF” list on the internet. This VYM vs SCHD comparison breaks down 11 years of data to show which one actually delivers.

But underneath the surface, they’re making very different bets.

SCHD holds 100 stocks screened by four quality factors and replaces roughly a quarter of its portfolio every March. VYM holds 570+ stocks filtered primarily by yield, with minimal turnover and no dramatic annual overhaul. SCHD pays about 3.35%. VYM pays about 2.40%. SCHD lost to VOO by 13 points in 2025. VYM lost by a smaller margin.

The question isn’t which is “better.” It’s which one matches how you actually invest — and how well you sleep during the years when dividend stocks trail the market.

For a full deep dive into either fund individually, see our SCHD ETF review or VOO ETF review. For how SCHD compares to the broader market, our SCHD vs VOO comparison covers that in detail.

VYM vs SCHD — At a Glance

Data as of early 2026. Sources: Vanguard, Schwab, Yahoo Finance

The Core Difference — How Each Fund Picks Stocks

This is where the real divergence lives — and the core of any VYM vs SCHD comparison. The fee is nearly identical. The goal sounds similar. But the construction methods produce very different portfolios.

VYM’s approach: cast a wide net. The FTSE High Dividend Yield Index starts with all U.S. stocks, ranks them by forward dividend yield, takes the top half (excluding REITs), and weights them by market cap. That’s it. No quality screen. No cash-flow filter. No profitability test. If a company pays a high yield, it’s in. The result is a broad, passively managed basket of 570+ dividend stocks that changes gradually over time.

SCHD’s approach: pick the best 100. The Dow Jones U.S. Dividend 100 Index requires 10+ consecutive years of dividend payments, then ranks the eligible pool on four quality metrics: cash flow to debt, return on equity, dividend yield, and 5-year dividend growth. The top 100 make the cut. Every March, the index reconstitutes from scratch — replacing roughly 20-25% of the portfolio. It’s an active-style strategy in a passive wrapper.

The practical difference? VYM holds a lot of “good enough” dividend payers. SCHD holds a concentrated group of “best in class” dividend payers. VYM will include a stock paying 2.5% yield with mediocre fundamentals. SCHD would reject that stock unless its quality scores rank in the top 100.

Sector Breakdown — Two Very Different Portfolios

Source: Yahoo Finance, Robinhood. As of February 2026.

The headline difference in this VYM vs SCHD breakdown: VYM is a financial-sector-heavy fund (20.5%), while SCHD is an energy-heavy fund (20.8%). These two sector bets are the biggest driver of their performance divergence.

When bank earnings beat expectations and financial stocks rally, VYM benefits more. When oil prices rise and energy companies gush cash flow, SCHD benefits more. In 2022, energy was the only sector that went up — which helped SCHD limit losses, but VYM’s broader diversification still won the year (-1.57% vs -3.23%). In years when financials lead (like early recovery periods after rate cuts), VYM has the edge.

VYM is also significantly more exposed to utilities (6.5% vs 1.3%). Utilities are classic defensive dividend payers — slow-growing, rate-sensitive, but reliable income generators. If you want utility exposure in your dividend portfolio, VYM gives it to you automatically. SCHD’s quality screen tends to reject utilities because their return on equity and growth metrics don’t score well.

Year-by-Year Total Return — VYM vs SCHD

Total returns include dividends reinvested. Source: Yahoo Finance, Yahoo Finance

SCHD won 7 out of 11 years — and it’s not even close during SCHD’s best stretch. From 2017 through 2021, SCHD outperformed VYM every single year, with the 2020 gap reaching a stunning 14 percentage points (15.08% vs 1.08%). In any VYM vs SCHD comparison, this five-year stretch stands out: SCHD’s quality screen was the edge, with its concentrated portfolio of high-quality stocks outrunning VYM’s broader but more diluted basket.

But the tide shifted in 2022-2025. VYM’s broader diversification started paying off as SCHD dealt with the Broadcom exit fallout and energy concentration headwinds. In 2024 and 2025, VYM won both years — a signal that SCHD’s reconstitution mechanism may be dragging on returns.

Cumulative performance since 2015 still favors SCHD — but the gap is narrowing. If the 2022-2025 trend continues, VYM could pull even over the next few years.

The $10K Test — Where Your Money Went

Over the full 10 years, SCHD turned $10K into roughly $29,800 versus VYM’s $25,000. That’s a $4,800 advantage — about 19% more money. SCHD’s quality screen and higher dividend growth added real value during the 2017-2021 golden years. But the VYM vs SCHD gap is narrowing fast.

But narrow the window to 5 years or less, and VYM wins both. This is the SCHD dilemma: its best attribute (concentrated quality) is also its vulnerability when the reconstitution ejects the wrong stocks at the wrong time.

Dividend Deep Dive — Yield, Growth, and Income

Year 10 and 20 projections use 6% growth for VYM and 7% base case for SCHD. Static share count, no reinvestment.

SCHD wins every dividend metric except recent growth trajectory. The VYM vs SCHD income gap starts wide and gets wider: SCHD begins with a higher yield (3.35% vs 2.40%), grows faster over long periods (11% vs 7% historically), and reaches a projected 12.1% yield-on-cost by year 20 versus VYM’s 7.3%.

But — and this is critical — SCHD’s recent dividend growth has slowed to about 4% annually, while VYM has held steadier at about 5%. The Broadcom replacement effect is real: swapping fast-growing dividend stocks for slower-growing yield stocks compresses future growth. If SCHD’s 4% recent trend becomes the new normal, VYM’s steadier 5-6% growth becomes more competitive than the lifetime averages suggest.

For a more detailed income projection with multiple scenarios, see our SCHD ETF review’s income table.

Risk Profile — Diversification vs Concentration

VYM is more diversified across every dimension. More stocks (570 vs 101), lower concentration (top 10 at 24% vs 42%), and lower turnover (8% vs 20-25%). In the VYM vs SCHD risk comparison, VYM is the “boring but stable” dividend fund.

SCHD is more concentrated and more volatile — but that concentration is what enabled it to outperform VYM for most of the last decade. Fewer stocks means each holding has a bigger impact on returns, positive or negative.

The diversification gap is where VYM earns its keep. With 570 stocks versus SCHD’s 101, no single holding can derail VYM’s income stream. SCHD’s top 10 holdings account for 42% of the fund — meaning a dividend cut from just one or two top names would visibly dent your quarterly check. VYM’s top 10 is only 24%, so the same event barely registers. During volatile years, that structural difference matters more than any single performance metric.

Which One Fits Your Portfolio?

My Preferred Split

For a pure dividend portfolio, I’d lean SCHD — but not 100% SCHD. The VYM vs SCHD decision ultimately comes down to whether you value quality concentration or broad stability. The yield advantage and quality screen still matter, even if the reconstitution creates occasional pain. Something like 60% SCHD and 40% VYM gives you the income upside from SCHD’s concentrated quality picks, buffered by VYM’s broader diversification.

If the 2024 Broadcom situation really bothers you — if you don’t like the idea of a fund systematically selling its best stocks — VYM is the cleaner answer. You’ll give up about 0.5% in yield and some dividend growth potential, but you’ll sleep better. And over 20+ years, the mental peace of a stable, low-turnover fund has real value that doesn’t show up in backtest spreadsheets.

Neither fund should be your only holding. Both are missing growth exposure. Pair either one with VOO or QQQ to capture the tech-driven returns that dividend funds structurally miss.

VYM vs SCHD — The Numbers That Matter

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