VIG and SCHD represent the two dominant approaches to dividend ETF investing: dividend growth and dividend yield. Choosing between them — or holding both — is one of the most common questions income investors face.
Investment Approaches
VIG (Vanguard Dividend Appreciation) holds companies with at least 10 consecutive years of dividend increases. It prioritizes the growth trajectory of dividends, resulting in a portfolio of high-quality companies with moderate current yield (~1.8%) but strong growth potential. SCHD (Schwab US Dividend Equity) screens for high yield, dividend consistency, and fundamental quality factors, producing a higher current yield (~3.5%) with less emphasis on growth.
Holdings Differences
VIG tends to hold more technology and healthcare stocks — companies that may pay modest dividends but grow them rapidly. SCHD weights more toward financials, consumer staples, and industrials — sectors known for generous current payouts. Overlap between the two is typically 20-30%, making them reasonable to hold together.
Total Return vs. Income
VIG has generally delivered higher total returns due to its growth stock exposure, while SCHD generates more current income. For investors reinvesting dividends during accumulation, VIG's total return advantage matters more. For retirees spending dividends, SCHD's higher yield provides more cash flow per dollar invested.
Check the detailed performance data on the VIG vs SCHD comparison page.
Which Is Right for You?
If you are 10+ years from needing income, VIG's dividend growth approach will likely produce higher total return and a larger future income stream. If you need income today, SCHD delivers nearly double the current yield. Many investors hold both, blending current income with growing income. Learn more about building income strategies in our education center.
