The Best Dividend ETF to Buy: SCHD Pays a High Yield While VIG Focuses on Dividend Growth

Core Viewpoint - The Vanguard Dividend Appreciation ETF (VIG) and the Schwab U.S. Dividend Equity ETF (SCHD) are both focused on dividend-paying U.S. companies, but they differ significantly in terms of yield, sector exposure, and portfolio construction [5][6]. Fund Overview - VIG tracks the S&P U.S. Dividend Growers Index, consisting of 338 stocks that have raised dividends for at least 10 consecutive years, with a sector emphasis on technology (27.8%), financial services (21.4%), and healthcare (16.7) [1] - SCHD tracks the Dow Jones U.S. Dividend 100 Index, focusing on 103 high-yielding, high-quality U.S. stocks, with a sector mix heavily weighted towards energy (19.3%), consumer defensive (18.5%), and healthcare (16.1%) [2] Performance and Yield - SCHD has a dividend yield of 3.8%, which is more than double that of VIG, appealing to income-focused investors [8] - VIG emphasizes dividend growth rather than yield, excluding the top 25% highest-yielding companies to focus on stable dividend payers [9] Portfolio Construction - VIG offers broader diversification with over three times as many holdings compared to SCHD, which may attract investors looking for stability and consistent dividend growth [6][11] - SCHD's concentrated approach may appeal to those seeking a targeted, income-oriented portfolio [2][5] Investment Strategy - Both ETFs provide a low-cost way to generate passive income without the need for extensive stock analysis [7] - VIG demonstrates that dividend growth stocks, with reinvested dividends, can outperform high-yielding stocks over the long term [10]