When comparing SCHD (Schwab US Dividend Equity ETF) and VOO (Vanguard S&P 500 ETF), the choice of “better” depends on your investment goals and preferences. Here’s a comparison based on various factors:
Performance:
- VOO tracks the S&P 500 and aims to replicate its performance. Historically, it has provided strong returns with an annualized return of 12.70% over the past 10 years².
- SCHD tracks the Dow Jones U.S. Dividend 100 Index, focusing on high dividend-paying companies. It has an annualized return of 11.43% over the same period².
Dividend Yield:
- SCHD has a higher dividend yield, around 3.39%, which might appeal to those seeking regular income².
- VOO has a lower yield of 1.35%, which may be suitable for those focusing on growth².
Expense Ratio:
- SCHD has an expense ratio of 0.06%, slightly higher than VOO’s 0.03%². While both are low, VOO is more cost-effective.
Risk and Volatility:
- Both ETFs have similar levels of risk and volatility, with daily standard deviations around 12%².
- They also have a high correlation of 0.88, indicating that their price movements are strongly related².
Examples:
- If you invested $10,000 in VOO 10 years ago, it would have grown more compared to the same investment in SCHD, due to VOO’s higher annualized return².
- However, if you prioritize dividends, SCHD would have provided a higher income stream over the same period².
Ultimately, VOO might be better for those looking for overall market exposure and lower fees, while SCHD could be preferable for investors seeking higher dividend yields. It’s important to align your choice with your investment strategy and risk tolerance.