SCHD vs FDVV: Comparing Two Top Dividend ETFs for Income Investors

Key Takeaways

• SCHD offers a higher current dividend yield (approximately 3.5%) compared to FDVV’s 2.76%, making it more attractive for immediate income seekers
• FDVV has delivered stronger total returns over the past 5 years (18.87% annualized) versus SCHD’s approximately 14%, driven by significant technology sector exposure
• SCHD employs a quality-focused dividend growth strategy with 100 holdings, while FDVV uses a strategic beta approach with 107 holdings emphasizing both current yield and growth potential
• Both ETFs charge low expense ratios, with SCHD at 0.06% and FDVV at 0.16%, representing minimal cost differences for most investors
• SCHD provides more balanced sector diversification, while FDVV concentrates 26% of assets in technology stocks including major positions in NVIDIA, Microsoft, and Apple
• SCHD has demonstrated superior dividend growth consistency with a 10-year dividend growth rate exceeding 12% annually

Table of Contents

• Overview: What Are SCHD and FDVV?
• Dividend Yield Comparison
• Dividend Growth Track Records
• Total Return Performance Analysis
• Investment Methodology and Strategy Differences
• Holdings and Sector Allocation
• Expense Ratios and Cost Comparison
• Risk and Volatility Considerations
• Which ETF Is Right for You?
• Frequently Asked Questions

Overview: What Are SCHD and FDVV?

For dividend-focused investors seeking diversified exposure through exchange-traded funds, SCHD and FDVV represent two compelling but distinctly different approaches to generating income from equity investments. Both funds have earned strong reputations within the dividend investing community, yet they employ different methodologies and have produced varying results across market cycles.

The Schwab U.S. Dividend Equity ETF (SCHD) launched in October 2011 and has since become one of the most popular dividend growth ETFs in the market, with assets under management exceeding $60 billion as of late 2025. According to Schwab Asset Management, SCHD tracks the Dow Jones U.S. Dividend 100 Index, which screens for U.S. companies based on fundamental strength metrics including cash flow to total debt, return on equity, dividend yield, and dividend growth rate. The fund explicitly targets high-quality dividend-paying stocks that have demonstrated both the ability and commitment to sustain and grow their dividends over time.

The Fidelity High Dividend ETF (FDVV) launched more recently in September 2016 and currently manages approximately $7.1 billion in assets. FDVV tracks the Fidelity High Dividend Index, which employs a proprietary methodology designed to capture large- and mid-capitalization dividend-paying companies expected to continue paying and growing their dividends. Unlike SCHD’s quality-focused screening, FDVV uses what Fidelity describes as a “strategic beta” approach that emphasizes both current yield and growth potential, resulting in notably different sector allocations and individual holdings.

Understanding the philosophical differences between these two ETFs is essential for investors trying to decide which better fits their income objectives and risk tolerance. SCHD represents a more conservative, quality-focused approach emphasizing dividend sustainability and growth, while FDVV takes a more growth-oriented stance that has resulted in heavier technology sector weighting and stronger capital appreciation in recent years.

Dividend Yield Comparison

Current dividend yield represents one of the most immediate considerations for income-focused investors. As of the most recent data, SCHD offers a 30-day SEC yield of approximately 3.5%, while FDVV’s 30-day SEC yield stands at 2.76% as of September 30, 2025. This 74 basis point difference translates to meaningful additional income for investors prioritizing current cash flow over total return potential.

To illustrate the income difference concretely: a $100,000 investment in SCHD would generate approximately $3,500 in annual dividend income at current yields, while the same investment in FDVV would produce roughly $2,760 annually. For retirees or other investors depending on portfolio income to fund living expenses, this $740 annual difference (or about $62 per month) could factor significantly into the decision-making process.

However, yield comparisons require context beyond simple percentages. According to analysis from PortfoliosLab’s comparison tools, the yield difference reflects underlying strategy differences rather than one fund being objectively “better.” SCHD’s higher yield results from its focus on mature, established dividend payers with lower growth rates but more stable cash flows. FDVV’s lower current yield accompanies higher exposure to growth-oriented dividend payers that retain more earnings for reinvestment but may deliver stronger total returns through capital appreciation.

The yield difference has also varied over time as market conditions and sector performance have shifted. During periods when value stocks and traditional dividend sectors outperform, SCHD’s yield advantage typically expands. Conversely, when growth stocks and technology companies rally, FDVV’s yield may compress relative to SCHD as its share price appreciates faster than its dividend payments grow.

Investors should also consider dividend payment frequency. Both SCHD and FDVV distribute dividends quarterly, with similar payment schedules that facilitate income planning. Neither fund offers monthly dividend payments, which some income investors prefer for aligning with monthly expense obligations. For investors seeking monthly distributions, combining these funds with monthly-paying dividend ETFs might provide a solution, as discussed in analysis of monthly dividend ETF combinations.

Dividend Growth Track Records

While current yield measures today’s income, dividend growth rate determines how that income stream evolves over time. This metric proves particularly important for long-term investors who want their income to keep pace with or exceed inflation, and for younger investors in the accumulation phase who prioritize growing future income over maximizing current distributions.

SCHD’s Dividend Growth Record

SCHD has established an impressive dividend growth track record since its 2011 inception. According to data from Digrin, SCHD’s dividend growth rate has averaged approximately 12-13% annually over the past decade. This consistent growth reflects the fund’s underlying index methodology, which explicitly screens for companies with strong dividend growth histories. The fund’s dividend per share has increased from $0.99 in 2012 to approximately $2.45 in 2024, more than doubling over this 12-year period.

FDVV’s Dividend Growth Record

FDVV’s dividend growth history is shorter given its 2016 inception, but the available track record shows somewhat lower dividend growth rates averaging approximately 8-10% annually. According to Digrin’s FDVV analysis, the fund’s annual dividend has grown from approximately $1.10 at inception to roughly $1.95 in 2024. While this represents solid growth, it trails SCHD’s pace over comparable periods.

Why Are Their Dividend Growth Records Different?

The dividend growth differential stems directly from the funds’ different construction methodologies. SCHD’s Dow Jones U.S. Dividend 100 Index specifically weights dividend growth rate as one of its four key screening criteria, ensuring the fund naturally tilts toward companies with strong records of annual dividend increases. Many SCHD holdings are Dividend Aristocrats or Dividend Achievers—companies with 25+ or 10+ years of consecutive dividend increases, respectively.

FDVV’s index, while considering dividend sustainability and growth potential, places less explicit emphasis on historical dividend growth rates and more weight on current yield and expected future dividend capacity. This results in a portfolio that includes some higher-yielding but slower-growing dividend payers alongside growth-oriented technology companies that have shorter dividend histories but strong cash generation capacity.

For investors employing a dividend growth investing strategy similar to that advocated by Daniel Peris and other dividend growth proponents, SCHD’s stronger dividend growth track record may prove more aligned with their objectives. The compounding effect of 12% annual dividend growth versus 9% annual dividend growth becomes substantial over investment horizons of 10-20+ years, potentially more than offsetting FDVV’s superior capital appreciation in total return calculations for very long-term holders.

Total Return Performance Analysis

While dividends represent a crucial component of total return for income-focused investors, capital appreciation also significantly impacts wealth accumulation. Comparing SCHD and FDVV’s total return performance across various time periods reveals important differences that reflect their distinct investment approaches.

Over the past five years (as of September 30, 2025), FDVV has delivered notably stronger total returns. According to the fund’s fact sheet, FDVV produced an average annual return of 18.87% over this period. Data from Total Real Returns indicates SCHD generated approximately 14% average annual returns over a comparable timeframe, representing a meaningful performance gap of roughly 4.87 percentage points annually.

To put this difference in concrete terms: a $10,000 investment in FDVV five years ago would have grown to approximately $23,550 (assuming dividend reinvestment), while the same investment in SCHD would have reached roughly $19,250. This $4,300 difference, or about 22% more wealth creation, primarily stems from FDVV’s heavier technology sector weighting, which benefited enormously from the artificial intelligence boom, cloud computing growth, and general technology sector outperformance during this period.

However, examining performance across different market environments provides important context. According to Morningstar’s analysis of dividend ETFs, SCHD has demonstrated stronger relative performance during market downturns and periods of heightened volatility. During 2022, when the S&P 500 declined approximately 18% and growth stocks fell precipitously, SCHD’s quality focus and defensive sector positioning helped limit losses compared to more growth-oriented dividend funds.

Looking at calendar year returns provides additional perspective. In 2024, FDVV returned 21.71% while SCHD produced approximately 15-16% returns. This 5-6 percentage point gap reflects the continued strength of mega-cap technology stocks that dominate FDVV’s portfolio. However, in 2022—a difficult year for equities generally—SCHD’s estimated decline of approximately 5-7% compared more favorably to FDVV’s 4.11% decline, with SCHD’s larger allocation to defensive sectors providing some insulation from the growth stock selloff.

The performance comparison highlights a fundamental investment principle: higher returns generally accompany higher risk. FDVV’s superior five-year performance has come with greater volatility and larger drawdowns during market stress periods. SCHD’s more modest returns have been accompanied by relatively lower volatility and smaller peak-to-trough declines, consistent with its quality-focused dividend growth strategy.

Investment Methodology and Strategy Differences

Understanding how each fund selects and weights its holdings illuminates why they perform differently and helps investors determine which approach better aligns with their investment philosophy.

SCHD’s Quality-Focused Dividend Growth Approach:

SCHD tracks the Dow Jones U.S. Dividend 100 Index, which employs a multi-step screening process focused on fundamental quality and dividend sustainability. According to Schwab Asset Management, the index begins with the universe of U.S. dividend-paying stocks and screens for companies that have paid dividends for at least 10 consecutive years. This initial filter immediately eliminates companies with inconsistent dividend policies or short dividend histories.

The methodology then applies four fundamental quality metrics: cash flow to total debt ratio (measuring financial strength), return on equity (measuring profitability), indicated annual dividend yield, and five-year dividend growth rate. Stocks are scored and ranked across these four factors, with the top 100 companies selected for index inclusion. The index rebalances annually, providing stability while allowing gradual portfolio evolution as companies’ fundamental characteristics change.

This approach explicitly targets what investment professionals often call “dividend aristocrat” characteristics—financial strength, profitability, reasonable valuation, and demonstrated commitment to dividend growth. The result is a portfolio of mature, established companies with proven ability to generate consistent cash flows and return capital to shareholders through both dividends and moderate share price appreciation.

FDVV’s Strategic Beta Approach:

FDVV tracks the Fidelity High Dividend Index, which Fidelity describes as using a proprietary rules-based methodology to identify large- and mid-cap dividend-paying companies expected to continue paying and growing dividends. While Fidelity does not disclose all aspects of its proprietary screening process, the resulting portfolio characteristics suggest a methodology that balances current yield with growth potential and dividend sustainability.

The “strategic beta” designation indicates that FDVV doesn’t simply screen for the highest current yields or the strongest historical dividend growth rates in isolation. Instead, the index appears to employ a multi-factor approach that considers dividend yield, earnings growth prospects, cash flow generation, and potential for future dividend increases. This methodology allows for inclusion of companies with relatively shorter dividend histories if they demonstrate strong fundamental capacity for dividend sustainability and growth.

One notable aspect of FDVV’s approach is its willingness to concentrate meaningfully in sectors and individual stocks that meet its criteria. The fund’s 6.68% allocation to NVIDIA, 5.61% to Microsoft, and 5.50% to Apple—totaling nearly 18% of the portfolio in just three stocks—demonstrates a higher concentration tolerance than SCHD’s more diversified approach. This concentration can amplify returns when these large positions perform well but also introduces additional risk if they underperform.

Holdings and Sector Allocation

Examining the actual holdings and sector allocations of SCHD and FDVV reveals stark differences that explain much of their divergent performance characteristics and risk profiles.

Top Holdings Comparison:

FDVV’s top 10 holdings, according to its September 2025 fact sheet, include:

• NVIDIA Corp (6.68%)
• Microsoft Corp (5.61%)
• Apple Inc (5.50%)
• Broadcom Inc (2.88%)
• JPMorgan Chase & Co (2.81%)
• ABN AMRO Bank NV-GDR (2.33%)
• Visa Inc Class A (2.11%)
• Philip Morris International Inc (2.04%)
• Exxon Mobil Corp (1.95%)
• Bank of America Corporation (1.86%)

These top 10 positions represent 33.77% of FDVV’s total assets, indicating moderate concentration with substantial exposure to mega-cap technology companies.

SCHD’s top holdings typically include companies such as Home Depot, Verizon Communications, Coca-Cola, PepsiCo, Merck, AbbVie, Broadcom, Cisco Systems, Amgen, and Texas Instruments. While there is some overlap (Broadcom appears in both funds’ top holdings), SCHD generally emphasizes more traditional dividend-paying sectors and avoids the heavy concentration in growth-oriented technology stocks seen in FDVV.

Sector Allocation Differences:

The sector allocation differences between SCHD and FDVV represent perhaps the most striking contrast between these two funds:

FDVV’s sector allocation (as of September 30, 2025):

• Information Technology: 26.19%
• Financials: 21.67%
• Consumer Staples: 12.02%
• Utilities: 9.44%
• Real Estate: 8.81%
• Energy: 8.76%
• Consumer Discretionary: 4.06%
• Health Care: 3.46%
• Communication Services: 2.70%
• Industrials: 2.55%

SCHD’s sector allocation (current as of December 2025):

• Energy: 19.34%
• Consumer Staples: 18.50%
• Health Care: 16.10%
• Industrials: 12.28%
• Financials: 9.37%
• Consumer Discretionary: 8.52%
• Information Technology: 8.30%
• Communication Services: 4.68%
• Materials: 2.87%
• Utilities: 0.04%

The sector differences reveal fundamentally different portfolio construction approaches. FDVV’s 26.19% allocation to information technology is more than three times SCHD’s 8.30% tech weighting. This dramatic difference explains much of FDVV’s outperformance during the 2023-2025 period when AI-related enthusiasm and mega-cap technology stocks drove market gains.

Conversely, SCHD’s substantial 19.34% energy allocation stands in stark contrast to FDVV’s 8.76% energy weighting. This makes SCHD significantly more exposed to energy sector performance, commodity price movements, and energy company dividend policies. During periods of rising oil and gas prices or energy sector strength, SCHD benefits from this overweight position. However, during energy downturns or periods of commodity price weakness, this concentration introduces sector-specific risk.

The financials comparison is particularly noteworthy: FDVV allocates 21.67% to financial stocks compared to SCHD’s relatively modest 9.37%. This suggests FDVV finds more dividend-paying financial companies that meet its strategic beta criteria, while SCHD’s quality screening may filter out financial companies due to concerns about balance sheet strength, regulatory risks, or dividend sustainability during economic stress.

SCHD’s more balanced allocation across energy, consumer staples, and healthcare (collectively representing 53.94% of the portfolio) reflects its quality-focused methodology that distributes holdings across multiple defensive sectors. FDVV’s concentration in technology and financials (collectively 47.86%) creates a more growth-oriented profile despite its dividend focus.

Expense Ratios and Cost Comparison

Cost efficiency represents a critical consideration for long-term investors, as even small differences in expense ratios compound significantly over decades of investing. Both SCHD and FDVV offer competitive costs relative to actively managed dividend funds, but SCHD maintains a distinct advantage in this category.

SCHD charges an expense ratio of 0.06%, making it one of the lowest-cost dividend-focused ETFs available. This means an investor with a $100,000 position pays just $60 annually in fund expenses. FDVV’s expense ratio of 0.16%, while still quite reasonable by industry standards, costs $160 annually on the same $100,000 investment—nearly three times higher than SCHD’s cost.

The 0.10% annual expense difference may appear trivial, but over long investment horizons, this cost differential meaningfully impacts total returns. Using a hypothetical $100,000 investment earning 8% annually before fees over 30 years: with SCHD’s 0.06% expense ratio, the investment would grow to approximately $986,000, while with FDVV’s 0.16% ratio, it would reach about $956,000—a difference of roughly $30,000 attributable solely to the higher expense ratio.

However, this cost analysis must be viewed in proper context. Over the past five years, FDVV’s superior gross returns of approximately 18.87% annually versus SCHD’s 14% have more than overcome the modest expense ratio difference. Even after accounting for the additional 0.10% in annual expenses, FDVV investors have realized substantially higher net returns. The lesson here is that while expense ratios matter significantly, they represent just one factor in total return. A fund with higher expenses that generates materially higher gross returns will still deliver better outcomes for investors.

Both funds also benefit from extremely low tracking error—the degree to which their returns deviate from their underlying indices. FDVV’s fact sheet reports a tracking error of just 0.03%, indicating the fund very closely replicates its benchmark index performance. SCHD similarly demonstrates minimal tracking error. This precision means investors receive the intended investment exposure without significant slippage from index-tracking imperfections.

Neither fund charges sales loads, 12b-1 fees, or redemption fees, consistent with modern ETF structures. Both trade on major exchanges with tight bid-ask spreads given their substantial asset bases and high trading volumes, meaning investors face minimal transaction costs when buying or selling shares. For most retail investors making periodic investments or rebalancing, the spread costs should be negligible.

Risk and Volatility Considerations

Understanding the risk characteristics of SCHD and FDVV helps investors assess which fund better matches their risk tolerance and portfolio objectives. Several metrics illuminate the relative risks of these two dividend-focused ETFs.

Standard Deviation and Volatility:

FDVV’s three-year standard deviation stands at 13.37%, according to its fact sheet. While direct comparative data for SCHD isn’t provided in the sources, SCHD’s quality focus and more defensive sector allocation typically result in somewhat lower standard deviation, likely in the 11-12% range. This suggests FDVV experiences slightly larger price swings in both directions—higher highs during bull markets but potentially lower lows during corrections.

The volatility difference reflects the fundamental nature of their holdings. FDVV’s heavy concentration in large-cap technology stocks introduces greater volatility, as these stocks often experience more dramatic price movements based on earnings reports, growth expectations, and market sentiment shifts. SCHD’s emphasis on stable, mature dividend payers in more defensive sectors typically results in more muted price fluctuations.

Beta Analysis:

FDVV’s beta of 1.00 (measured against the Fidelity High Dividend Index) indicates it moves in line with its benchmark. When measured against broader market indices like the S&P 500, FDVV’s technology-heavy portfolio likely produces a beta slightly above 1.0, suggesting it amplifies both gains and losses relative to the overall market.

SCHD typically exhibits a beta in the 0.85-0.95 range versus the S&P 500, indicating somewhat lower sensitivity to overall market movements. This defensive characteristic appeals to risk-averse investors seeking equity exposure with reduced volatility, particularly during market downturns. The quality-focused screening methodology naturally selects financially stable companies that tend to hold up better during economic stress.

Maximum Drawdown:

Maximum drawdown—the largest peak-to-trough decline during a specific period—provides insight into downside risk. While neither fund’s fact sheet provides this metric explicitly, analysis of calendar year returns offers clues. During 2022’s bear market, FDVV declined 4.11%, while SCHD likely experienced a somewhat larger decline of 5-7% based on its value-stock tilt (value stocks generally underperformed in 2022 despite the growth stock selloff).

During more severe downturns, SCHD’s quality focus and financial strength screening typically provide better downside protection. Companies with strong balance sheets, high returns on equity, and healthy cash flows tend to maintain or recover their valuations more quickly during market stress periods. FDVV’s concentration in mega-cap technology stocks could face steeper declines if market leadership rotates away from these names or if a technology-sector-specific correction occurs.

Dividend Reliability:

From an income reliability perspective, SCHD offers greater certainty. Its explicit focus on companies with at least 10 consecutive years of dividend payments and strong financial metrics makes dividend cuts within the portfolio relatively rare. Even during the COVID-19 pandemic, when many companies suspended or reduced dividends, SCHD’s holdings largely maintained their payments due to the fund’s quality screening.

FDVV’s shorter required dividend history and inclusion of faster-growing but potentially less mature dividend payers introduces slightly more dividend reliability risk. While the fund’s large-cap focus and emphasis on financial stability help mitigate this concern, the portfolio does include companies with shorter dividend track records that might prove more willing to adjust payouts during challenging business conditions.

Which ETF Is Right for You?

Neither SCHD nor FDVV is objectively “better”—the appropriate choice depends on individual investor circumstances, objectives, and preferences. Understanding which investor profile aligns with each fund’s characteristics can guide the selection process.

Consider SCHD if you:

• Prioritize current income: SCHD’s higher 3.5% yield provides more immediate income for retirees or others depending on portfolio distributions to fund living expenses
• Value dividend growth: The fund’s impressive 12%+ average annual dividend growth rate appeals to investors focused on building growing income streams that outpace inflation
• Prefer lower volatility: SCHD’s quality focus and defensive sector positioning typically produce smaller price swings, suiting risk-averse investors or those nearing retirement
• Want broad diversification: The fund’s balanced sector allocation across financials, consumer staples, healthcare, industrials, and other sectors provides diversification benefits
• Seek established track record: With a 2011 inception date, SCHD has demonstrated its strategy through multiple market cycles including the 2020 COVID crash and 2022 bear market
• Minimize costs: The rock-bottom 0.06% expense ratio makes SCHD one of the most cost-efficient options for dividend-focused exposure

Consider FDVV if you:

• Emphasize total return: FDVV’s superior 5-year performance of 18.87% annualized appeals to investors focused on wealth accumulation rather than maximizing current income
• Want technology exposure: The fund’s 26% allocation to information technology provides meaningful participation in AI, cloud computing, and digital transformation trends
• Can tolerate higher volatility: Investors comfortable with larger price swings in exchange for potentially higher returns may appreciate FDVV’s more growth-oriented approach
• Seek growth-dividend balance: The fund combines exposure to established dividend payers with faster-growing companies that have strong dividend growth potential
• Trust Fidelity’s methodology: Investors who value Fidelity’s research capabilities and proprietary screening process may prefer FDVV’s strategic beta approach
• Don’t need maximum current income: The lower 2.76% current yield matters less for investors in accumulation phase or those not dependent on portfolio income

Portfolio Combination Strategies:

Some investors may find that combining SCHD and FDVV in appropriate proportions offers an optimal balance. For example, a 60% SCHD / 40% FDVV allocation would provide a blended yield of approximately 3.2%, capture SCHD’s superior dividend growth characteristics, while still maintaining meaningful exposure to FDVV’s technology holdings and total return potential. This combined approach could offer better risk-adjusted returns than holding either fund exclusively, particularly for investors with 10-20+ year investment horizons.

Alternatively, investors might allocate between SCHD and FDVV based on age or life stage. Younger investors in their accumulation years (20s-40s) might overweight FDVV for its higher growth potential, then gradually shift toward SCHD as they approach retirement and prioritize income generation and capital preservation. This lifecycle approach aligns investment characteristics with evolving financial needs.

Frequently Asked Questions

Which has better performance, SCHD or FDVV?

FDVV has delivered stronger total returns over the past 5 years, with an average annual return of 18.87% compared to SCHD’s approximately 14% over the same period. This superior performance primarily stems from FDVV’s heavier weighting in large-cap technology stocks that have benefited from the AI boom and digital transformation trends. However, SCHD has demonstrated better downside protection during market corrections due to its quality-focused dividend growth strategy and more defensive sector positioning. Performance leadership can shift based on market environment, with FDVV typically outperforming during technology-led bull markets and SCHD showing relative strength during volatile periods or value stock rotations.

Does SCHD or FDVV pay higher dividends?

SCHD currently offers a higher dividend yield of approximately 3.5% versus FDVV’s 2.76% yield. On a $100,000 investment, this translates to roughly $740 more in annual income from SCHD. Additionally, SCHD has demonstrated stronger dividend growth, averaging approximately 12-13% annually over the past decade compared to FDVV’s 8-10% annual dividend growth since its 2016 inception. For investors prioritizing income generation, SCHD’s higher current yield and superior dividend growth rate make it more attractive. However, FDVV’s lower yield accompanies stronger total return performance, so investors focused on wealth accumulation rather than current income may prefer FDVV despite its lower yield.

What is the main difference between SCHD and FDVV investment strategies?

SCHD employs a quality-focused dividend growth strategy, screening for U.S. companies with at least 10 consecutive years of dividend payments and strong fundamentals including cash flow-to-debt ratio, return on equity, dividend yield, and dividend growth rate. This results in a portfolio of mature, financially stable companies with proven dividend track records. FDVV uses what Fidelity calls a “strategic beta” approach with proprietary screening that balances current yield with growth potential, resulting in greater concentration in large-cap technology stocks including NVIDIA (6.68%), Microsoft (5.61%), and Apple (5.50%). SCHD’s methodology produces more balanced sector diversification, while FDVV allocates 26% to information technology versus SCHD’s typical 12-14% tech allocation.

Which ETF has lower fees, SCHD or FDVV?

SCHD charges a significantly lower expense ratio of 0.06% compared to FDVV’s 0.16%. This means SCHD costs $60 annually per $100,000 invested, while FDVV costs $160 annually for the same investment amount. Over a 30-year investment horizon, this 0.10% annual difference could result in approximately $30,000 less accumulation in FDVV versus SCHD, all else being equal. However, investors should consider that FDVV’s superior gross returns over the past 5 years have more than offset its higher expense ratio, delivering better net returns despite the additional costs. Expense ratios represent one important factor but should be evaluated alongside performance, risk characteristics, and investment objectives.

Is SCHD or FDVV better for retirement income?

SCHD generally proves more suitable for retirement income needs due to its higher current yield (3.5% vs. 2.76%), superior dividend growth track record (12-13% annually vs. 8-10%), and lower volatility. The combination of higher immediate income and faster dividend growth helps retirees maintain purchasing power as living costs increase over time. SCHD’s quality focus and emphasis on financially stable companies also provides greater confidence in dividend sustainability during market downturns. However, investors in early retirement with 20-30+ year time horizons and higher risk tolerance might consider FDVV or a combination of both funds to capture growth potential while still generating income. The optimal choice depends on factors including other income sources, spending needs, portfolio size, and risk capacity.

Can I hold both SCHD and FDVV in my portfolio?

Yes, many investors choose to hold both SCHD and FDVV to balance their complementary characteristics. A combined position captures SCHD’s higher yield and dividend growth alongside FDVV’s stronger total return potential and technology exposure. For example, a 60% SCHD / 40% FDVV allocation would provide a blended yield around 3.2% while maintaining meaningful participation in growth-oriented dividend payers. Some investors use a lifecycle approach, overweighting FDVV during accumulation years for growth potential, then gradually shifting toward SCHD as retirement approaches and income needs increase. The funds have different sector allocations and holding overlaps are limited, so combining them provides genuine diversification benefits rather than redundant exposure.

This article is for educational purposes only and does not constitute investment advice. Investors should conduct their own research and consider consulting with a financial advisor before making investment decisions. Past performance does not guarantee future results. ETF investments carry risks including loss of principal, market volatility, and sector concentration risk. The holdings and characteristics of SCHD and FDVV may change over time as their underlying indices rebalance.