A comprehensive comparison of the three major dividend ETFs, VIG, VYM, and SCHD. Who is the real kin

Recently, many friends have been discussing dividend ETFs in the US stock market. This time, let’s talk about the “three giants” ---- VIG, VYM, SCHD .

These three ETFs each represent three typical directions of dividend strategy. The editor will compare their strategies, historical performance, and target audience in depth to see who is the real “dividend king”.

Introduction to VIG, VYM, SCHD

1. Vanguard Dividend Appreciation ETF (VIG)：

Established by Vanguard Fund in 2006, it tracks the Standard & Poor US Dividend Growth Index and focuses on companies with stable dividend growth. Through the multi-asset trading wallet BiyaPay App, we can see the current trend of VIG.

2. Vanguard High Dividend Yield ETF (VYM):

Also launched by Vanguard Fund in 2006, it tracks the FTSE High Dividend Yield Index and mainly invests in companies with high current dividend yields. Through the multi-asset trading wallet BiyaPay App, we can see the current trend of VYM.

3. Schwab U.S. Dividend Equity ETF (SCHD):

Published by Jiaxin Wealth Management in 2011, it tracks the Dow Jones US Dividend 100 Index and selects companies with high dividend yields, stable earnings, and financial stability. Through the multi-asset trading wallet BiyaPay App, we can see the current trend of SCHD.

Here are the basic information of these three companies, you can take a look:

Dividend strategies and operating principles of the three

1. Comparison of the three dividend strategies:

VIG: Dividend Growth Strategy, VIG’s strategy focuses on selecting companies with a stable dividend growth record to build a long-term stable income portfolio.

VYM: High dividend yield strategy, VYM focuses on companies with high current dividend yields. This strategy usually provides higher cash dividends, but may face the risk of unstable dividend growth in some companies.

SCHD: A strategy that combines growth and dividends, SCHD emphasizes multi-factor screening, including profitability and financial health, so that its holdings not only have high dividend yields, but also have stable growth potential.

2. Operating principle, comparison of the three positions

• Top 10 positions:

VIG is heavily invested in technology stocks, including Apple, Broadcom, Microsoft, etc. The top 10 holdings account for 30.24%, with moderate concentration.

VYM is heavily invested in high dividend Blue Chips, including JPMorgan Chase, ExxonMobil, Procter & Gamble, etc. The top 10 positions account for 24.73%, and the positions are relatively scattered.

SCHD is heavily invested in high dividend industry leaders, including Cisco, BlackRock, Home Depot, etc. The top 10 positions account for 40.87% of the positions, and the positions are relatively concentrated.

• Industry distribution:

VIG: Focus on high-growth industries such as information technology, finance, healthcare, and consumer goods, focusing on growth potential.

VYM: The distribution of various industries is relatively balanced, but the proportion of the financial industry is relatively high, and the overall bias is towards stability and Value Proposition.

SCHD: The industry distribution is also relatively balanced, with finance and healthcare as the main focus, balancing stability and long-term growth potential.

• Holding style

VIG: moderate number of holdings, high market value, high valuation, strong profitability, low dividend yield, biased towards high growth, high valuation of large enterprises, the main capital appreciation.

VYM: holds a large number of shares, high market value but low valuation, slightly weaker profitability, high dividend yield, and focuses on dividend-type Blue Chips.

SCHD: Concentrated holdings, moderate market value, relatively reasonable valuation, strong profitability, high dividend yield, balanced growth and income.

• From this perspective:

VIG’s core is growth, emphasizing high-growth large enterprises, with industries concentrated in high-growth areas such as technology and consumption. VYM’s core is stability, tending to diversify investments, covering multiple industries, and emphasizing value and stability. SCHD’s core is balance, concentrated shareholding, focusing on shareholder returns, balanced industry distribution, and balancing growth and value. The holding structures of the three are consistent with their respective investment strategies, providing choices that meet different investment preferences.

The historical performance of the three is compared as follows

1. Profitability:

Comparison of growth curves of VIG vs VYM vs SCHD vs SPY (S & P 500 ETF):

Annual Earnings Comparison:

Annualized returns of VIG vs VYM vs SCHD vs SPY:

Correlation:

By comparing the growth curves, annual returns, annualized returns, and correlation tests of VIG, VYM, SCHD, and SPY, the following points can be found:

Overall profitability SPY leads in 1-year, 3-year, 5-year, and full-cycle returns, with the strongest performance. VIG is second, while SCHD has lower returns in the past 3 years, and VYM has the weakest performance after extending the cycle.

Downside performance

During the market downturn, the performance of the three has its own advantages and disadvantages, and no ETF has shown an absolute defensive advantage.

Correlation The correlation between the three ETFs and SPY is above 0.9, showing strong synchronization. Among them, the correlation between VIG and SPY is the highest, reaching 0.96; the correlation between VYM and SCHD is also 0.91, which is basically consistent with the volatility of the market.

2. Risk resistance:

Retracement curves of VIG vs VYM vs SCHD vs SPY:

VIG vs VYM vs SCHD vs SPY Main Risk-Return Indicators:

By comparing the drawdown curves, Standard Deviation, maximum drawdown, Sharpe Ratio, profit and loss ratio, and Beta indicators of VIG, VYM, SCHD, and SPY:

VIG: Compared to SPY, VIG has slightly lower volatility and maximum drawdown, but the overall difference is not significant. With relatively low volatility and drawdown, VIG has the strongest risk resistance among the three and the highest investment cost-effectiveness.

Although VYM has low volatility, its maximum drawdown is actually the highest, especially during the 2020 epidemic period when its maximum drawdown reached 23.97%. Its defense is weak and its investment cost-effectiveness is low.

The volatility of SCHD is slightly lower than SPY, and the maximum drawdown is also smaller than SPY, but the overall investment cost performance is still inferior to VIG, ranking second.

In short, among VIG, VYM, and SCHD, VIG has the smallest overall volatility, smallest drawdown, and highest investment value, followed by SCHD, while VYM is overall lower.

3. Size, expense ratios, and dividends

VIG 's latest scale 102.11 billion US dollars, VYM 72.724 billion US dollars, SCHD 63.077 billion US dollars, the three are the three largest dividend type, liquidity do not have to worry.

VIG, VYM, and SCHD all have a management fee of 0.06%, which is very low and friendly.

Dividend distribution frequency: All three are paid quarterly, which is in line with the market average. The dividend yields of the three ETFs are higher than the market average, but there are differences. SCHD has the highest dividend yield, slightly higher than VYM, while VIG has the lowest dividend yield, with a certain gap compared to the previous two. VIG focuses more on the growth of dividends rather than immediate dividends.

Summary and comparison of the advantages and disadvantages of the three, as well as which investment groups are suitable for them

1.VIG

Features: VIG focuses on dividend growth, investing in growth industries such as information technology and healthcare, and holding companies usually have high growth potential.

Limitations: The dividend rate is relatively low, not suitable for investors with high cash flow needs, and highly correlated with the market, which is of little significance to the hedging market.

Suitable for the crowd: suitable for the pursuit of long-term appreciation, willing to bear certain fluctuations of growth investors.

2.VYM

Features: VYM focuses on high dividend yield companies, with diversified positions, mainly distributed in traditional stable industries such as finance and consumption, with stable dividends.

Limitations: limited growth, volatility, drawdown are higher than its positioning, dividend fluctuations.

Suitable for people: suitable for conservative investors who pursue stable cash flow, especially retirees who value dividend income.

3.SCHD

Features: SCHD takes into account high dividends and growth potential, holds a relatively balanced position, and selects financially stable companies.

Limitations: The top ten positions are more concentrated, and the performance is not as good as growth ETFs when the market rises. In recent years, the allocation of technology is low and the performance is poor.

Suitable for the crowd: Suitable for investors who want to balance certain growth in high dividend returns and adapt to various market cycles.

In short, for investors who pursue long-term capital appreciation and can withstand certain volatility, VIG may be a better choice, especially for those who want to invest in high-growth industries (such as technology and healthcare) and focus on dividend growth. In comparison, VYM is more suitable for conservative investors seeking stable cash flow, especially retirees, whose higher dividend yield provides a more stable source of income. However, it should be noted that VYM’s performance is relatively weak during market downturns, and its risk resistance is not as good as the other two funds. SCHD provides a more balanced strategy that can provide high dividend income while balancing certain growth potential, suitable for investors who want to maintain a certain growth space while obtaining stable income.

Therefore, the editor suggests that investors can easily enter the US stock market through the multi-asset trading wallet BiyaPay, regardless of whether they choose VIG, VYM, or SCHD. They can trade online in real-time, easily enjoy the returns brought by dividends, and achieve diversified asset allocation. In addition, investors can also deposit digital currencies (such as U) to withdraw US dollars/Hong Kong dollars to their bank accounts, and then deposit and withdraw funds to other brokerage platforms, so that BiyaPay can be used as a professional deposit and withdrawal tool. Through such a multi-asset trading wallet investment, investors can not only invest funds in dividend ETFs more efficiently, but also improve the flexibility of overall investment and help stabilize income growth.

In summary

Overall, VIG, VYM, and SCHD each represent different dividend investment strategies with obvious advantages, but also come with certain risks and complexities. VIG focuses on dividend growth and is suitable for investors who want long-term appreciation and are willing to tolerate fluctuations; VYM provides stable cash flow and is suitable for conservative investors, but performs weaker in market downturns; SCHD takes into account both dividends and growth potential and is suitable for investors who want to find growth space in stable returns. Regardless of which ETF is chosen, the key is whether you can understand its strategy and risks, and know how to respond in different market environments. Proper investment can make all three ETFs an important part of your investment portfolio; improper investment may also bring considerable losses.

I hope the above comparative analysis can provide reference for everyone when choosing dividend ETFs. Of course, if you have different opinions or better suggestions, please feel free to discuss and exchange.