Building Dividend Income: A Steadier Approach or a Higher-Paying One With VYM and SCHD

Core Insights - Vanguard High Dividend Yield ETF (VYM) and Schwab U.S. Dividend Equity ETF (SCHD) are both designed for dividend-focused investors, with VYM having a lower expense ratio and SCHD offering a higher yield and concentrated portfolio [1][2] Cost & Size Comparison - Both VYM and SCHD have an expense ratio of 0.06%, but VYM is slightly more affordable with a 0.04% expense ratio [3][4] - As of February 9, 2026, VYM has a 1-year return of 20.77% and a dividend yield of 2.33%, while SCHD has a 1-year return of 18.20% and a dividend yield of 3.51% [3][4] Performance & Risk Analysis - Over a 5-year period, VYM has a maximum drawdown of 15.83% compared to SCHD's 16.86% [5] - An investment of $1,000 would grow to $1,616 in VYM and $1,409 in SCHD over the same period [5] Portfolio Composition - SCHD holds 101 stocks with significant allocations in energy (19%), consumer defensive (18%), and healthcare (18%), featuring major positions in companies like Lockheed Martin, Texas Instruments, and Chevron [6] - VYM has a broader diversification with 589 holdings, focusing on financial services (21%), technology (18%), and healthcare (13%), with top holdings including Broadcom, JPMorgan Chase, and Exxon Mobil [7] Investor Considerations - Dividend investors prioritize consistent payouts, especially during market volatility, making the choice between VYM and SCHD significant based on individual investment strategies [8]