SCHD vs VIG vs VYM: how the three dividend ETFs differ
SCHD, VIG and VYM all hold US dividend-paying stocks, but each follows a different index with a different idea. VIG is built around a record of dividend growth. VYM is built around high current yield. SCHD is often described as a blend of dividend record, quality and yield. That difference decides what you end up owning.
The short answer
All three are exchange-traded funds (ETFs). Each one follows an index, a set of written rules that picks which stocks it holds.
- SCHD is the Schwab U.S. Dividend Equity ETF. It's often described as a blend: it looks at a company's dividend record, its financial quality and its yield.
- VIG is the Vanguard Dividend Appreciation ETF. "Appreciation" is the clue: it's built around companies with a record of raising their dividends.
- VYM is the Vanguard High Dividend Yield ETF. It's built around companies that pay a higher yield than average.
This isn't a recommendation to buy or sell SCHD, VIG or VYM.
The real difference is the idea behind each index. That's the same choice as dividend growth vs high yield, packaged as a fund. For the basics, see dividend investing explained.
Side by side: the idea behind each fund
| SCHD | VIG | VYM | |
|---|---|---|---|
| Full name | Schwab U.S. Dividend Equity ETF | Vanguard Dividend Appreciation ETF | Vanguard High Dividend Yield ETF |
| Issuer | Schwab | Vanguard | Vanguard |
| Built around | Dividend record, quality, yield | Dividend growth record | High current yield |
| Tends to favour | Steady, cash-rich payers | Long streaks of raises | Big payers today |
| Trade-off | Screens can lean into whatever scores well | Lower yield today | Less focus on growth |
| Main risk | Heavy weight in a few sectors | Growth slows | High yields that get cut |
For the exact rules, read each index's methodology. The fund pages at Schwab and Vanguard name the index and link to it. The rules change from time to time, so a blog post from two years ago may be wrong.
I don't print yields, fees or prices here. They change daily, and websites disagree about them. Get them from the issuer's page, with the date.
What to compare on the issuer's page
Open each fund's page and compare these, on the same day:
- The index and its rules. What gets a stock in, and what kicks it out?
- Number of holdings. A fund with fewer stocks leans harder on each one.
- Sector weights. A high-yield fund often leans into a few sectors. Know which.
- Top 10 holdings, as a share of the fund. How much rides on a handful of names?
- Expense ratio. The yearly fee, taken from the fund's assets.
- Which yield is shown. Funds can show an SEC yield, a distribution rate or a trailing yield. They aren't the same. See distribution rate vs SEC yield and forward vs trailing dividend yield.
- How often the index is rebalanced. That's when holdings change.
Comparing three funds on yield alone is like comparing three cars on top speed. It's one number, and not the one that decides how the trip goes.
A worked example: the bigger payout in a bad year
Here are two made-up funds (hypothetical; these are not SCHD, VIG or VYM figures). Fund G is a growth-style fund paying 2% a year. Fund Y is a yield-style fund paying 4%. You put $10,000 in each.
Then a bad year: both funds' prices fall 15%.
| Fund G (growth style) | Fund Y (yield style) | |
|---|---|---|
| Dividends for the year | +$200 | +$400 |
| Price change | −$1,500 | −$1,500 |
| Total result | −$1,300 | −$1,100 |
| Tax on dividends at 15% (taxable account) | $30 | $60 |
| After that tax | −$1,330 | −$1,160 |
Check one column the other way: Fund Y ends the year at $8,500 in shares plus $400 in cash, or $8,900. From $10,000, that's −$1,100. Take off $60 of tax and it's −$1,160.
The bigger payout softened the year, but it didn't stop the fall. And in a taxable account it came with a bigger tax bill. A fund that falls further than the other, or that cuts its payout, can easily erase that $200 head start. What counts is Total return: payouts plus price change, after tax.
Which one fits you?
There's no single best fund. It depends on what you want the money to do.
- You want a bigger payout now: a high-yield style fits. Know which sectors you're leaning into.
- You won't touch the money for years: a growth style gives the dividend room to grow.
- You want something in between: a blend style.
- You can't decide: owning a broad index fund and ignoring yield is a fair choice too.
If you sell covered calls on a dividend fund, look at its option chain before you buy. See covered calls on SCHD and the wheel strategy.
For Canadians: which account
All three are US-listed, so their dividends face US withholding tax. The account decides whether you get it back:
- RRSP: US dividends are exempt from US withholding under the tax treaty: 0% (exempt) (irs.gov).
- TFSA: any US tax withheld can't be claimed back as a Canadian foreign tax credit (canada.ca).
- Taxable account: Canada credits the US tax withheld, up to 15% of the gross dividend.
More in TFSA, RRSP or taxable. Check the CRA's pages for the current rules.
Questions
What is the difference between SCHD, VIG and VYM?
They follow different indexes. VIG is built around a record of dividend growth, VYM around high current yield, and SCHD is often described as a blend of dividend record, quality and yield. The index rules decide which stocks each one holds.
Which is better, SCHD, VIG or VYM?
None of them is better for everyone. A higher payout suits someone who needs cash now. A growth style suits someone who won't touch the money for years. Compare the index rules, fees and sector weights on the issuer pages.
Why do websites show different yields for these funds?
Some show the SEC yield, some the distribution rate, some a trailing yield, each on a different day. Use the issuer's page and note which yield it is.
Should I hold US dividend ETFs in my TFSA or RRSP?
In an RRSP, US dividends are exempt from US withholding under the treaty. In a TFSA, any US tax withheld can't be recovered. Which account is better also depends on your other holdings and plans.
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