The Schwab U.S. Dividend Equity ETF (SCHD) and the iShares Core High Dividend ETF (HDV) are two leading high-income equity ETFs, each employing distinct strategies to select high-yield stocks supported by strong fundamentals. SCHD targets companies with robust balance sheets and a commitment to dividend growth, while HDV focuses on high-yield stocks that score well on Morningstar’s quality metrics. This difference in selection criteria impacts their yields and total returns, making them suitable for different investment strategies.
Both ETFs have shown competitive performance, with SCHD historically outperforming HDV by over 3 percentage points annually over the past decade. However, in the last five years, HDV has gained an edge, outperforming SCHD by 2.6 percentage points. The overlap in their holdings (44%) indicates a correlation in performance, yet their differing sector allocations and stock selection methodologies can lead to varying results in different market conditions.
For investors seeking sustainable income, SCHD’s robust stock selection strategy and higher yield of 3.3% make it an attractive option, especially for long-term dividend growth. However, HDV’s recent performance suggests it may also be worth considering depending on market conditions.
Source: fool.com