SCHD ETF Review: 11 Years of Data Exposed This Risk

This SCHD ETF review covers 11 years of real performance data for the most popular dividend ETF on the planet. Over $84 billion in assets. A 3.35% yield that’s triple the S&P 500’s. Thirteen consecutive years of dividend increases. It shows up in every “best dividend ETF” article, every r/dividends thread, every retirement portfolio screenshot on Twitter.

And for most of that run, it deserved the hype. From 2012 through 2021, SCHD compounded at over 15% annually with dividends reinvested, not far behind the S&P 500, while paying a yield north of 3%. You got almost-market returns plus real income. That’s an absurd combination.

Then 2024 happened.

In March 2024, SCHD’s annual reconstitution forced out Broadcom (AVGO) — a stock that had rallied 100%+ on AI tailwinds. Its replacement? Bristol-Myers Squibb. The fund went from holding one of the decade’s best performers to owning a pharmaceutical company with shrinking revenue. The result: SCHD delivered 4.33% total return in 2025 while VOO delivered 17.82%.

That 13-point gap opened a loud debate: is SCHD’s best decade behind it? Or did the Broadcom exit create the kind of temporary underperformance that becomes a buying opportunity?

This is the honest answer — with all the data, the numbers, and the context that gets lost in the hot takes. If you’ve already seen our comparison articles (SCHD vs VOO, SCHD vs DGRO, JEPI vs SCHD), this SCHD ETF review goes deeper into what makes the fund tick — and where its engine might stall.

Year-by-Year Total Return — SCHD vs VOO Head-to-Head

Total returns include dividends reinvested. Source: Yahoo Finance

The pattern is loud and clear. SCHD won 2016, 2021, and 2022. VOO won everything else — often by wide margins. The 2022 result is the highlight reel for SCHD bulls: while the S&P 500 was bleeding -18%, SCHD only dropped -3%. If you were retired and living off dividends that year, SCHD was a fortress.

But the last three years (2023–2025) have been rough. SCHD averaged about 6.9% total return per year. VOO averaged about 23%. That cumulative gap is massive — compounded, we’re talking roughly $65,000 difference on a $100,000 portfolio. VOO turned that $100K into about $186K. SCHD turned it into about $122K.

The question isn’t whether SCHD underperformed. It did. The question is whether the conditions that caused it — mega-cap tech dominance, AI tailwinds, low-yield stocks outperforming — are permanent or cyclical. No SCHD ETF review can answer that with certainty, but the data points both ways.

Risk Profile — Lower Volatility, Similar Drawdowns

Two things stand out. First, SCHD’s volatility is lower (15.6% vs 17.3%). It moves less day-to-day, which is easier on nerves and on portfolios that can’t absorb big swings. The beta of 0.93 confirms this: SCHD captures about 93% of the market’s movement, dampening both the highs and the lows.

Second, the P/E contrast is striking. At 17.8x earnings, SCHD trades at a massive discount to VOO’s 28x+. That valuation gap is one reason the value crowd thinks SCHD is set for a rotation trade: when growth stocks eventually get repriced (as they did in 2022), cheaper value stocks tend to outperform.

The 0.83 correlation means SCHD mostly moves with the S&P 500 but provides meaningful diversification. Adding SCHD to a VOO-heavy portfolio does reduce overall volatility — something a pure VTI addition won’t achieve.

The Machine Under the Hood — How SCHD Picks Stocks

Most SCHD ETF reviews gloss over this. They shouldn’t. The index methodology is the single most important thing to understand about this fund, because it explains both why SCHD crushed it for a decade and why it stumbled recently.

SCHD tracks the Dow Jones U.S. Dividend 100 Index. Here’s how stocks get in:

Step 1 — The eligibility filter. A company must have paid dividends for at least 10 consecutive years. This immediately kills most tech growth stocks, recent IPOs, and anyone who cut their dividend during COVID. Only battle-tested payers survive this gate.

Step 2 — The quality screen. From the eligible pool, the index ranks stocks on four fundamental metrics: cash flow to total debt (balance sheet strength), return on equity (profitability), dividend yield (income), and 5-year dividend growth rate (trajectory). The 100 highest-scoring stocks make the cut.

Step 3 — Modified market-cap weighting. Unlike the S&P 500, no single stock can exceed ~4.5% at rebalance, and no sector can dominate beyond 25%. This forces regular trimming of winners.

Step 4 — Annual reconstitution. Every March, the entire index is reconstituted from scratch. Stocks that no longer rank in the top 100 are kicked out, regardless of how well they’ve performed. This is where the Broadcom problem originated.

The system is elegant in theory: you get high-yield, fundamentally strong, proven dividend payers, rebalanced annually to avoid concentration. In practice, the annual purge creates a structural issue we need to talk about.

The Broadcom Problem — Why Winners Get Ejected

In March 2024, Broadcom (AVGO) was SCHD’s third-largest holding at about 5% of the fund. The stock had nearly tripled over the prior 18 months on AI demand for its custom chips. That price surge crushed its dividend yield from ~3% down to under 1.5%.

The index methodology doesn’t care about momentum or future earnings. It cares about current yield ranking. Broadcom’s yield fell too low, its score dropped, and it was removed.

What replaced it? Bristol-Myers Squibb (BMY) at ~4% weight, Hershey (HSY) at ~1%, and a handful of other high-yielding names with declining earnings trajectories. AVGO went on to gain another 40%+ through 2025. BMY went sideways.

This isn’t a one-time glitch. It’s a feature of the methodology.

Any stock that appreciates rapidly (which compresses its yield) gets penalized in SCHD’s scoring system. The fund is structurally designed to sell its winners and replace them with higher-yielding (often cheaper, sometimes declining) alternatives. In a market where growth stocks dominate, this creates a persistent headwind against total return.

March 2026 Reconstitution — What’s Likely Changing

SCHD’s next annual reconstitution takes effect March 23, 2026. Based on the index methodology and current holdings data, analysts expect several moves:

Likely sector shifts: Energy exposure (~20.8% currently) and financials (~8.6%) may decrease, while consumer defensive and healthcare could increase. The index tends to rotate toward wherever yield is most concentrated.

Potential exits to watch: Any current holding whose price has surged enough to compress its yield below the competitive threshold is at risk. Stocks near the edges of the top-100 ranking are always vulnerable.

Historical context: The 2024 reconstitution replaced 23 out of 100 stocks — roughly a quarter of the portfolio. That’s typical. SCHD’s turnover runs much higher than passive index funds like VOO (2% turnover) precisely because of these annual overhauls.

The reconstitution matters because it can meaningfully alter the fund’s sector tilt, income profile, and growth trajectory overnight. Anyone buying SCHD right now is buying a portfolio that will partially transform in six weeks.

Top 10 Holdings — Value, Defense, and Energy

Holdings as of February 10, 2026. Source: Robinhood

Notice anything? Not a single mega-cap tech name. No NVIDIA, no Apple, no Microsoft. The only “tech” exposure is Texas Instruments (semiconductor) — a mature, dividend-paying business, not a growth play. Cisco dropped out of the top 10 after the latest rebalance. This is the polar opposite of what you’d find in QQQ or VTI.

The top 10 is concentrated — about 42% of the fund — but the ~4.5% cap per stock prevents any single name from dominating the way NVIDIA does in VOO at 7.7%. That cap is both a safety net and a ceiling on individual stock upside.

Sector Breakdown — The Anti-Tech Portfolio

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

The sector contrast is dramatic. SCHD has 9.7% in technology versus VOO’s 35.1%. Instead, it loads up on energy (20.8%), consumer staples (18.5%), and healthcare (15.6%) — sectors where established companies pay high, stable dividends.

This is exactly why SCHD performs differently in different market environments. When tech sells off (2022), SCHD holds up beautifully. When tech rips (2023–2024), SCHD falls behind. It’s not random. It’s sector math.

If you already own VOO, adding SCHD creates genuine diversification — not just more stocks, but different sectors. The two funds share very little overlap in their top holdings. We quantified this in our SCHD vs VOO breakdown.

Dividend & Cost Analysis

Something gets buried under all the total return comparisons: SCHD’s dividend per share has grown from $0.04 at inception to over $1.05 annually (post-split). On a pre-split basis, that’s from essentially nothing to over $3.00 per share per year.

The average annual dividend growth rate since inception is roughly 11%. That means income from SCHD doubles approximately every 6.5 years. A $100,000 position at 3.35% yield generates $3,350/year — and that same position would reasonably reach $6,700/year in about 6–7 years without adding a single dollar.

But there’s a caveat. Recent growth has slowed:

The 2024 reconstitution that swapped fast-growing Broadcom for slower-growing Bristol-Myers directly impacted the portfolio’s aggregate dividend growth trajectory. When you replace a company growing its dividend at 12%+ with one growing at 3%, the math goes the wrong direction.

This deceleration is the core bear case against SCHD right now. The bull case? Even at 4–7% growth, SCHD still comfortably outpaces inflation, and the yield is still 3x the S&P 500’s.

Income Projection — What $100K in SCHD Actually Pays

Projection assumes static share count (no reinvestment, no additional purchases). DGR = Dividend Growth Rate. Starting yield: 3.35% on $100K.

At the base case (7% growth), your $100K investment pays $3,350 in year one and $12,115 in year twenty. Your yield-on-cost at that point would be 12.1%. Compare that to what $100K in VOO pays: about $1,110 in year one. SCHD’s income advantage is real and persistent for those who need cash flow. For more on this trade-off, see our SCHD vs VOO deep dive.

The 0.06% Fee

At 0.06%, SCHD costs $60 per year on a $100,000 position. Double VOO’s 0.03%, but still absurdly cheap compared to actively managed dividend funds charging 0.5–1.0%. Over a 30-year horizon at an 8% gross return, the gap between SCHD’s 0.06% fee and a 0.5% active fund compounds to over $140,000 on a $100K starting balance — that’s real money staying in your pocket.

Interactive SCHD Dividend Income Calculator

Model your own SCHD income projection. Adjust the dividend growth rate to test conservative, base, and optimistic scenarios.

The Bull Case vs The Bear Case

Verdict — Who Should (and Shouldn’t) Buy SCHD

The SCHD Verdict

For investors prioritizing income — cash flow to deploy this quarter — SCHD has historically been a strong fit. The 3.35% yield with 7%+ historical dividend growth is a compelling compounding scenario over a decade or more.

But SCHD alone has limits. The reconstitution mechanism is a real structural weakness that caps total return in growth-dominated markets. A blended approach — VOO for total market exposure, SCHD for income and sector diversification — gives you growth from tech and income from dividends, plus the valuation cushion SCHD provides during downturns.

Investors with a 30+ year horizon have historically tilted toward total return funds like VOO first. Those closer to needing cash flow — within 10–15 years — have increasingly weighted dividend growers like SCHD. The FIRE calculator can help model exactly when dividend income plus capital becomes sufficient to cover expenses.

Fund Specs — Quick Reference

Data as of early 2026. Sources: Schwab Asset Management, FinanceCharts, PortfoliosLab

Frequently Asked Questions

SCHD Deep Dives & Comparisons

Now that you’ve read this SCHD ETF review, dig into the head-to-head comparisons to see exactly how SCHD stacks up against the ETFs you’re actually deciding between. Each guide includes side-by-side performance data, dividend analysis, and a clear verdict.