SCHD Backtest Performance Calculator

How has SCHD performed compared to the S&P 500 over the long term?

Since its inception in October 2011, SCHD has generated an annualized return of approximately 12.94% compared to the S&P 500's 14.62% (as measured by SPY). While SCHD has slightly underperformed the broader market on a total return basis, it has historically provided higher dividend income and experienced less volatility during market downturns. The performance gap has widened in recent years (2023-2024) during a period of strong outperformance by large technology companies, which are underrepresented in SCHD.

What are the key factors that affect SCHD's performance?

Several factors influence SCHD's performance:

• • Sector allocation: SCHD is typically overweight in Consumer Defensive, Energy, Healthcare, and Industrials while underweight in Technology compared to the broader market.
• • Interest rate environment: Dividend stocks may be more sensitive to interest rate changes as they compete with bonds for income-seeking investors.
• • Economic cycles: SCHD often outperforms during value-oriented markets and economic uncertainty, while underperforming during strong growth-led rallies.
• • Dividend policies of underlying companies: Changes in dividend growth rates or cuts to dividends can impact both income generation and investor sentiment.
• • Market style rotation: Performance varies as markets rotate between value and growth investment styles.

Would SCHD perform better in a market downturn than growth-oriented ETFs?

Historical evidence suggests that SCHD tends to provide better downside protection during market corrections and bear markets compared to the broader market and growth-oriented ETFs. During the COVID-19 crash in early 2020, SCHD declined by 28.35% compared to the S&P 500's 33.72% drop. Similarly, in the 2022 bear market, SCHD outperformed the S&P 500 by over 9 percentage points. This relative outperformance during downturns is typically attributed to SCHD's focus on quality companies with strong balance sheets, stable earnings, and sustainable dividend policies, which investors often favor during periods of market stress.

How has SCHD's dividend growth compared to inflation?

SCHD has demonstrated strong dividend growth that has consistently outpaced inflation. Over the past 5 years, SCHD has grown its dividend at a compound annual growth rate (CAGR) of approximately 10.60%, significantly higher than the average U.S. inflation rate during the same period, which was around 2-3% (pre-2021) and 4-8% (2021-2023). This means that investors' income purchasing power has increased in real terms, which is a key consideration for retirees and income-oriented investors looking to maintain their standard of living in the face of rising prices.

Is SCHD better than dividend aristocrat ETFs like NOBL?

Whether SCHD is "better" than dividend aristocrat ETFs like NOBL depends on your investment goals and preferences. SCHD typically offers a higher current yield than NOBL (3.91% vs. 2.14% as of April 2025) and has delivered slightly higher total returns over most measurement periods. However, NOBL focuses exclusively on companies with at least 25 consecutive years of dividend increases (the Dividend Aristocrats), which may provide greater dividend reliability during economic downturns. SCHD has more flexibility in its selection criteria, potentially allowing it to include companies with stronger growth prospects but shorter dividend histories. The two ETFs also have different sector allocations, with NOBL having greater exposure to Consumer Staples and Industrials. Many income-focused investors hold both ETFs to diversify their dividend sources.

Does SCHD make sense in a tax-advantaged account?

Yes, SCHD can be appropriate for tax-advantaged accounts like IRAs and 401(k)s despite its tax-efficient qualified dividend distributions. While the tax advantage of qualified dividends is lost in these accounts, SCHD's overall return profile, dividend growth characteristics, and quality focus remain attractive features regardless of account type. In tax-advantaged accounts, investors can reinvest dividends without immediate tax consequences, potentially enhancing long-term compounding. For some investors, holding SCHD in a Roth IRA can be particularly advantageous, as it allows for tax-free withdrawal of both principal and the growing dividend stream during retirement.