SCHD vs. VIG: Which Dividend ETF Is the Better Buy?

2 hours ago 1

David Dierking, The Motley Fool

Sun, January 18, 2026 astatine 4:32 PM CST 4 min read

Comparing these ETFs is mostly astir assessing the imaginable of dividend maturation versus a high-yield strategy.
The Vanguard ETF's methodology presently emphasizes tech astatine the apical (for amended oregon worse), portion Schwab's looks for durable companies with steadfast equilibrium sheets.
I've ever liked Schwab's strategy, which considers dividend maturation history, yield, and equilibrium expanse quality.
10 stocks we similar amended than Vanguard Dividend Appreciation ETF ›

Dividend income investing usually isn't arsenic elemental arsenic conscionable picking the champion dividend stocks. Your idiosyncratic goals and income requirements tin person a large interaction connected whether you absorption connected dividend maturation oregon precocious yield.

Dividend maturation stocks thin to person greater durability and sustainability, but tin travel with debased yields. High output stocks tin assistance lick the income problem, but they tin besides crook into output traps that harm full returns. That makes the statement betwixt the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) and the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) an absorbing one.

Is the existent marketplace situation built much for classical dividend maturation oregon 1 that focuses connected precocious output with a prime tilt?

Rolled up dollar bills with a post-it that says "dividends".

The Vanguard Dividend Appreciation ETF tracks the S&P U.S. Dividend Growers Index. It targets large-cap stocks that person grown their yearly dividend for astatine slightest 10 consecutive years. It eliminates the apical 25% of yields successful bid to debar immoderate of those imaginable output traps and weights the last portfolio by marketplace cap.

There's bully and atrocious successful this strategy. On the positive side, the elimination of high-yielders makes this much of a axenic dividend maturation play, adjacent if it comes astatine the disbursal of income. On the downside, the marketplace cap-weighting gives penchant to the biggest companies careless of output oregon dividend history.

The Schwab U.S. Dividend Equity ETF follows the Dow Jones U.S. Dividend 100 Index. It targets companies of each sizes that person paid (but not needfully grown) dividends implicit the past decennary and scores them utilizing metrics specified arsenic instrumentality connected equity (ROE), currency travel to debt, dividend maturation rate, and yield. The 100 stocks with the champion operation of these factors marque the last cut.

This methodology produces a portfolio heavy tilted toward the output factor, but filled with higher-quality stocks. This is, successful my opinion, an advantageous mode of gathering the portfolio. Selecting purely by output tin beryllium unsafe due to the fact that it gives nary information to sustainability. By selecting stocks lone backed by prime equilibrium sheets helps code that problem.