HDV vs. SCHD: Comparing High-Yield Dividend ETFs
Summary:
The iShares Core High Dividend ETF (HDV) and Schwab U.S. Dividend Equity ETF (SCHD) target U.S. companies with strong dividend profiles but differ in critical dimensions. SCHD offers a higher yield (3.8% vs. 3.2%) and lower expense ratio (0.06% vs. 0.08%), while HDV demonstrates stronger recent performance with 9.5% 1-year returns versus SCHD’s 1.5%. Both concentrate in energy, healthcare, and consumer defensive sectors, but HDV’s overweight energy position has driven relative outperformance despite SCHD’s larger AUM ($72B vs. $12B). Investors must weigh income needs against volatility tolerance, as HDV exhibits lower beta (0.48) than SCHD (1.0).
What This Means for You:
- Prioritize SCHD for maximum dividend income generation due to its 19 basis-point yield advantage
- Consider HDV as a defensive equity allocation given its 48% lower volatility versus the S&P 500
- Factor in SCHD’s lower expense ratio for long-term cost efficiency in dollar-cost averaging strategies
- Monitor energy sector exposure as crude oil prices significantly impact both funds’ performance divergence
Original Post:
- SCHD is slightly cheaper to own and currently offers a higher dividend yield than HDV
- HDV has delivered bigger returns and a shallower five-year drawdown
- Both funds have large exposure to energy, consumer defensive, and healthcare sectors but with different top holdings
| Metric | HDV | SCHD |
|---|---|---|
| Expense ratio | 0.08% | 0.06% |
| 1-yr return | 9.5% | 1.5% |
| Dividend yield | 3.2% | 3.8% |
| Beta | 0.48 | 1.0 |
| AUM | $12B | $72B |
| Max drawdown (5y) | -15.41% | -16.86% |
SCHD’s portfolio emphasizes Bristol Myers Squibb and Merck, while HDV is overweight Exxon Mobil and Chevron. Neither employs leverage or ESG screens, maintaining pure dividend-focused strategies.
Extra Information:
Morningstar SCHD Analysis – Comprehensive performance metrics and portfolio analytics
SEC EDGAR Database – Official ETF filings and regulatory disclosures
Dividend Investing Guide – Strategic framework for income-focused portfolio construction
People Also Ask About:
- Which ETF has better dividend growth history? SCHD has demonstrated stronger dividend growth consistency with 10+ years of annual increases
- Are these ETFs suitable for retirement accounts? Both serve as effective tax-efficient income generators in Roth IRAs
- How sensitive are these funds to interest rate changes? SCHD’s financials exposure makes it more rate-sensitive than HDV’s energy tilt
- Can these ETFs replace bond allocations? Their low beta profiles partially replicate bonds’ defensive characteristics
Expert Opinion:
“While SCHD appears fundamentally superior on cost and yield metrics, HDV’s strategic sector allocation demonstrates the critical importance of factor timing in ETF selection. The 800 basis point performance differential underscores how energy exposure became the decisive variable in recent years – a reminder that even similar-seeming dividend funds carry distinct macroeconomic sensitivities.”
Key Terms:
- Best dividend ETF for income investors
- High yield low volatility ETFs comparison
- Dividend growth ETF performance analysis
- Sector-weighted dividend investment strategies
- Cost-efficient dividend ETF portfolio construction
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