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Schwab US Dividend Equity ETF (SCHD) gained 12% year-to-date with a 3.39% dividend yield and 10.61% average annual dividend growth over 10 years, outperforming Vanguard High Dividend Yield ETF (VYM) at 2.35% yield and iShares Core Dividend Growth ETF (DGRO) at 7.49% three-year dividend growth. SCHD holds only 9% in tech stocks versus significant tech exposure in VYM and DGRO, with 21% allocation to energy, 17% to consumer defensive, and 16% to healthcare.
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Capital is rotating away from speculative AI stocks toward defensive dividend stocks, positioning SCHD to lead dividend ETFs after trailing for three years.
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Tech and growth ETFs are constantly changing, and it’s hard to keep up with them. Even certain dividend ETFs have hitched themselves to tech stocks by using covered calls, and Schwab US Dividend Equity ETF (NYSEARCA:SCHD), Vanguard High Dividend Yield Index Fund ETF (NYSEARCA:VYM), and iShares Core Dividend Growth ETF (NYSEARCA:DGRO) remain among the only refuges.
When someone wants a normal dividend ETF they can buy, hold, and reinvest into for snowballing income, they often just want to buy the best one instead of holding multiple at once. 2026 has started off as a tumultuous year, so looking into this year’s performance is a good gauge for how these ETFs can perform in the long run.
Of course, the performance in just the past few months is not a good barometer for how they may perform in the future. We’ll also be looking into what the future holds for each of them.
READ: The analyst who called NVIDIA in 2010 just named his top 10 AI stocks
There’s no beating around the bush here. This ETF has been killing it in the past couple of months, and this will be quite surprising to you if you don’t keep up with the market. The Schwab US Dividend Equity ETF was one of the worst-performing dividend ETFs from 2022 to 2025. You barely got any capital gains, and the dividends you did get weren’t enough to put you ahead of the market.
Most other ETFs rode the coattails of AI, whereas SCHD had barely any tech names to speak of in its holdings. This set back the stock significantly, as non-AI stocks kept lagging.
2026 changed the equation significantly, and SCHD kicked off the year by massively outperforming peers. Investors are no longer blindly buying into any company that presents itself as an AI company. Wall Street is now extremely selective about the companies it believes deserve a premium, and for the first time in a while, capital is finally rotating to defensive and dividend stocks. This is SCHD’s niche, and I expect the ETF to ride a lot higher this year.
Obviously, you cannot expect this ETF to get you 50% gains just because it gained 12% year-to-date. What I do expect is that SCHD stops trailing and starts leading dividend ETFs instead.
Even when SCHD looked anemic, I called it the “King of Dividend ETFs” just before 2026 started.
My rationale is that this ETF only looks like an underperformer when you discount the dividends. Even during the 2022 to 2025 stretch, where capital gains were low, those reinvesting the dividends would still be keeping up with SCHD’s peers.
And speaking of the dividends, this is the only big ETF where you get a near-perfect balance between upside potential and income. The dividend yield is 3.39%, and no other major ETF offers a yield higher than this without significantly capping the upside potential.
Here’s how SCHD has performed against VYM and DGRO so far this year, inflation-adjusted, dividends reinvested.
SCHD is clearly up big.
The current trajectory is unlikely to last for long due to how fast the ETF has gone up, but I do expect stronger returns for the Schwab US Dividend Equity ETF. Investors across the board are realizing how dependable an ETF this is after the stellar performance this year. Over 21% of its holdings are in the energy industry, followed by 17% in consumer defensive and 16% in healthcare. That energy allocation is mostly in proven and stable businesses.
Both VYM and DGRO have significant tech exposure and can leave you overexposed to a tech correction. SCHD gets you just 9% exposure to tech, that too inside established dividend payers, not up-and-coming speculative growth stocks.
As it pertains to VYM, you get a 2.35% dividend yield, which falls short of what SCHD offers. This is also not a “high” dividend yield, as the ETF’s name suggests. In the past five years, dividends have grown by just 3.79% annually, and the growth rate is actually slowing down since dividends grew at a 5% annual clip in the past 10 years and have grown by a measly 2.49% clip annually in the past three years.
Surely, the iShares Core Dividend Growth ETF, or DGRO, will have higher growth, right? Yes, it does have higher growth compared to VYM, but it still falls behind that of SCHD’s. The 3-year dividend growth rate is at 7.49% annually, and 7.11% annually when you look at the 5-year growth rate. The 10-year average annual growth rate sits at 8.59%.
SCHD’s 3-year dividend growth rate is slightly behind that of DGRO’s at 7.06%, with the 5-year one at 9.15% annually. If you look at the 10-year average, it’s at 10.61%. Thus, you’re getting both a higher headline yield, higher near-term performance, and a higher dividend growth rate. What’s not to like?
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