When it comes to dividend growth ETFs, two heavyweights constantly show up in investor conversations: Schwab U.S. Dividend Equity ETF (SCHD) and Vanguard Dividend Appreciation ETF (VIG). Both funds focus on companies with strong dividend-paying track records, but they take very different approaches. The result? Distinct performance profiles, yield expectations, and suitability depending on your goals.
This blog takes a deep dive into both ETFs, comparing their strategies, holdings, performance, fees, and ideal investor profiles to answer the big question: Which one is better—SCHD or VIG?
1. The Basics
Before we get lost in the weeds, let’s start with the core facts.
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SCHD (Schwab U.S. Dividend Equity ETF)
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Launch: 2011
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Index: Dow Jones U.S. Dividend 100 Index
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Holdings: ~100 companies
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Expense Ratio: 0.06%
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Focus: High-quality U.S. dividend stocks with a strong yield + sustainability screen.
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Dividend Yield (2025): ~3.5–4.0%
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VIG (Vanguard Dividend Appreciation ETF)
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Launch: 2006
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Index: S&P U.S. Dividend Growers Index
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Holdings: ~315 companies
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Expense Ratio: 0.06%
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Focus: Companies with at least 10 consecutive years of dividend growth.
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Dividend Yield (2025): ~1.9–2.1%
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At first glance, both are cheap, diversified, and dividend-focused. But SCHD leans more toward high yield today, while VIG leans toward consistent dividend growth tomorrow.
2. Strategy Breakdown
SCHD’s Strategy: Quality + Yield
SCHD screens U.S. companies with:
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At least 10 years of dividend payments
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High dividend yield
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Strong fundamentals (ROE, debt-to-equity, cash flow)
It’s concentrated (~100 stocks) and tends to tilt toward value. You’ll see sectors like financials, industrials, energy, and consumer staples dominate. SCHD often attracts investors who want higher income in retirement.
VIG’s Strategy: Growth + Consistency
VIG only includes companies with 10+ consecutive years of dividend growth. It focuses less on the current yield and more on the stability of increases.
This makes it broader (~315 stocks) and tilted toward growth sectors like tech and healthcare. VIG is the choice for investors who prioritize dividend safety and compounding growth over headline yield.
3. Sector Exposure
Let’s look at how the two ETFs allocate capital:
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SCHD (as of 2025):
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Financials: ~20%
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Industrials: ~16%
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Consumer Staples: ~14%
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Health Care: ~13%
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Energy: ~10%
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Tech: ~12%
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VIG (as of 2025):
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Tech: ~25%
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Industrials: ~20%
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Health Care: ~15%
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Consumer Discretionary: ~12%
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Financials: ~12%
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Staples: ~10%
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Takeaway: SCHD is value-heavy (financials, staples, energy), while VIG is growth-tilted (tech, healthcare).
4. Dividend Yield & Growth
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SCHD offers a 3.5–4.0% yield, which is well above the S&P 500 (~1.4%). Dividend growth is strong but not as consistent as VIG’s. Historically, SCHD’s dividend CAGR has been 11–12% over 10 years.
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VIG has a lower yield (~2%), but its dividend growth CAGR has been 9–10% over the past decade. It’s like the tortoise: slow now, but steady compounding over decades.
Which is better?
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Retirees and income-focused investors: SCHD wins.
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Younger investors with long time horizons: VIG wins.
5. Performance History
Looking at total returns (price + dividends reinvested):
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10-Year CAGR (2015–2025):
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SCHD: ~11%
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VIG: ~10%
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S&P 500 (SPY): ~12%
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SCHD edges out VIG slightly, thanks to its higher yield. However, both lag SPY, which is more growth-heavy (thanks to mega-cap tech).
6. Risk Profile
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SCHD tends to be more volatile in market downturns, especially when financials or energy get hit. Example: SCHD dropped hard during the 2020 COVID crash but recovered quickly.
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VIG is defensive, with steadier dividend growers like Microsoft, Johnson & Johnson, and Visa. It typically loses less during downturns, though it underperforms in raging bull markets.
7. Top Holdings
SCHD Top Holdings (2025):
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Broadcom (AVGO)
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Home Depot (HD)
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Cisco (CSCO)
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PepsiCo (PEP)
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Pfizer (PFE)
VIG Top Holdings (2025):
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Microsoft (MSFT)
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Apple (AAPL)
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Johnson & Johnson (JNJ)
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Procter & Gamble (PG)
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Visa (V)
Difference: SCHD leans toward high-yield value stocks, while VIG leans toward mega-cap quality growers.
8. Fees & Efficiency
Both SCHD and VIG charge an ultra-low 0.06% expense ratio. That means just $6 annually per $10,000 invested. Over decades, this keeps costs from eating away at compounding.
Tracking error is minimal, and both are extremely liquid, making them excellent core holdings.
9. Who Should Buy SCHD?
SCHD is for you if you:
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Want higher dividend income today
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Are in/near retirement and want cash flow
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Believe in value sectors like financials, staples, and energy
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Don’t mind some volatility in exchange for yield
10. Who Should Buy VIG?
VIG is for you if you:
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Want lower yield but safer dividend growth
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Are younger and focused on long-term compounding
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Like mega-cap stability (MSFT, AAPL, JNJ)
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Want more exposure to growth sectors (tech, healthcare)
11. SCHD vs. VIG: Side-by-Side Comparison
| Factor | SCHD | VIG |
|---|---|---|
| Launch Year | 2011 | 2006 |
| Holdings | ~100 | ~315 |
| Expense Ratio | 0.06% | 0.06% |
| Dividend Yield | 3.5–4.0% | 1.9–2.1% |
| Dividend Growth | ~11–12% | ~9–10% |
| Sector Tilt | Value (financials, staples) | Growth (tech, healthcare) |
| Risk Profile | Higher volatility | Lower volatility |
| Best For | Retirees, income seekers | Younger investors, compounders |
12. The Psychology of Choosing Between Them
Investing isn’t just math—it’s behavioral.
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If you pick SCHD, you’ll love the fat dividend checks every quarter. But you might feel FOMO when VIG’s tech-heavy growth stocks surge.
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If you pick VIG, you’ll love watching dividend hikes roll in year after year. But you might feel impatient with the “low” 2% yield.
Your personality matters. Income lovers are better with SCHD. Long-term compounders fit with VIG.
13. The Case for Owning Both
Why not both? In fact, combining SCHD and VIG gives you:
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Higher yield (from SCHD)
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Consistent growth (from VIG)
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Broader sector coverage
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Diversified dividend strategy
A 50/50 split balances yield with growth, and it reduces concentration risk.
14. Alternatives to SCHD & VIG
Other dividend-focused ETFs worth mentioning:
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VYM (Vanguard High Dividend Yield ETF): Higher yield, more holdings than SCHD.
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DGRO (iShares Dividend Growth ETF): Similar to VIG but cheaper and broader.
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NOBL (ProShares S&P 500 Dividend Aristocrats ETF): Focused on 25+ years of dividend growth.
SCHD and VIG still stand out for their blend of low costs, strong records, and popularity.
15. Final Verdict
So, SCHD vs. VIG: Which one is better?
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If you want higher current income and can stomach value sector volatility: SCHD is better.
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If you want long-term compounding through dividend growth with less income today: VIG is better.
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If you don’t want to choose: Own both.
Both funds are top-tier, and unlike stock picking, you don’t need to guess winners. By holding SCHD and/or VIG, you own a basket of proven dividend machines that will likely deliver reliable returns over decades.