Let’s take a closer look at how two popular dividend ETFs, the iShares Core High Dividend ETF and the Schwab US Dividend Stock ETF, cater to income investors, even though they approach it differently. Both funds focus on U.S. companies that feature strong dividends, but distinct strategies and results set them apart. Their recent performance, dividend yields, and portfolio structuring differ, yet they both share low costs and a similar tilt toward certain sectors.
To help investors navigate their options, we’ll examine these ETFs based on factors like cost, yield, performance, risk, and portfolio make-up, aiming to align them with various income needs and risk tolerances.
Cost and Size Overview
| Metric | HDV | SCHD |
|---|---|---|
| Publisher | Ishares | Schwab |
| Expense Ratio | 0.08% | 0.06% |
| 1-Year Return (as of December 30, 2025) | 9.5% | 1.5% |
| Dividend Yield | 3.2% | 3.8% |
| Beta | 0.48 | 1.0 |
| AUM | $12 billion | $72 billion |
Beta indicates price volatility relative to the S&P 500, calculated from five years of weekly returns. The one-year return reflects total returns over the subsequent 12 months.
SCHD is a bit cheaper than HDV, boasting an expense ratio of 0.06%. It also offers a higher dividend yield at 3.8%, in contrast to HDV’s 3.2%.
Performance and Risk Assessment
| Metric | HDV | SCHD |
|---|---|---|
| Maximum Drawdown (5 years) | -15.41% | -16.86% |
| Growth of $1,000 in 5 years | $1,400 | $1,300 |
ETF Portfolio Composition
The Schwab U.S. Dividend Stock ETF includes 103 stocks, prioritizing sustainable dividends. Its portfolio is notably tilted toward the energy (19.34%), consumer defense (18.5%), healthcare (16.1%), and industrial (12.28%) sectors. Major holdings as of December 30 include Bristol Myers Squibb, Merck, Lockheed Martin, and ConocoPhillips, none of which are part of HDV’s top stocks. This fund has a solid 14.2-year performance record, accumulating over $72 billion in assets, making it one of the largest equity income ETFs available.
The iShares Core High Dividend ETF, meanwhile, has a more concentrated selection with 74 stocks, leaning toward consumer defense, energy, and healthcare. Its top-ranked holdings include Exxon Mobil, Johnson & Johnson, Chevron, and AbbVie. The tilt towards energy and healthcare is significant and positions them at the forefront. Both ETFs focus on dividend strength without using leverage or hedging, keeping their investment strategies straightforward.
Implications for Investors
When examining factors like portfolio size, costs, and dividend yield, one might naturally assume SCHD should be the stronger performer. Interestingly, HDV has consistently outperformed SCHD over the past 1, 3, and 5 years, with significant margins.
Both ETFs emphasize solid, sustainable dividends. HDV aligns with the Morningstar Dividend Yield Focus Index, which emphasizes high-yield stocks backed by financial strength. Conversely, SCHD tracks the Dow Jones U.S. Dividend 100 Index, also focusing on reliable high-yield stocks with strong financial health. A company’s financial health plays a crucial role; it’s not just about the yield itself, but rather dividend stability and growth that often contribute more to long-term returns.
In that sense, both SCHD and HDV are quality options for those seeking high-yield dividends. However, SCHD’s heightened exposure to the financial sector might pose some risks, especially given recent persistent interest rate increases affecting that sector. On the other hand, HDV leans towards energy, which can be beneficial; many top energy companies are also robust dividend payers with the ability to generate decent cash flow despite fluctuating oil prices.
Choosing between these two ETFs largely depends on their portfolio composition. Alternatively, investors might consider a blend of both to secure regular dividend income for the years ahead.
Glossary
ETF (Exchange Traded Fund): A type of investment fund that holds various assets, like stocks and bonds, and is traded on a stock exchange.
Dividend Yield: The annual dividend a fund or stock pays relative to its current price, expressed as a percentage.
Expense Ratio: An annual fee a fund charges for operating costs, stated as a percentage of assets.
Beta: A measure of a fund’s volatility compared to the broader market, typically the S&P 500.
AUM (Assets Under Management): The total market value of assets a fund manages on behalf of investors.
Maximum Drawdown: The greatest percentage drop in a fund’s value from its peak to its lowest point during a specified timeframe.
Portfolio Concentration: The extent to which a fund’s investments are focused on a limited number of assets or sectors.
Sector Tilt: Allocating a larger portion of a fund’s assets to a specific industry sector compared to other sectors or benchmarks.
Total Return: The complete return from an investment, encompassing price changes as well as any dividends or distributions.
Leverage: The use of borrowed funds or financial instruments to amplify potential returns (and risks) of an investment.
Hedge: Techniques employed to reduce investment risk, typically through derivatives and offsetting positions.
ESG Overlay: The incorporation of environmental, social, and governance factors into investment selection or portfolio management.
