Calculator Inputs
SCHD Parameters
DIVO Parameters
Comparison Results
Final Balance Comparison
SCHD Final Value
$114,279
DIVO Final Value
$119,552
Annual Income Comparison
Annual income in the final year of investment period:
SCHD Annual Income
$4,457
Based on 3.9% yield on final balance
DIVO Annual Income
$5,619
Based on 4.7% yield on final balance
Strategy Comparison
Total Return Analysis
DIVO outperforms SCHD in total return by approximately 4.6% over the investment period, demonstrating the potential advantage of its covered call strategy in certain market conditions.
Income Strategy Impact
DIVO provides approximately 26% more income than SCHD in the final year, making it potentially more suitable for investors prioritizing current income over dividend growth.
Portfolio Value Growth
Annual Income Growth
Results based on monthly compounding
Past performance does not guarantee future results
Understanding SCHD vs DIVO
What is SCHD?
SCHD (Schwab U.S. Dividend Equity ETF) is an exchange-traded fund that tracks the Dow Jones U.S. Dividend 100 Index. It focuses on high-quality, dividend-paying U.S. stocks with a history of consistently paying dividends.
Key characteristics of SCHD:
- Higher dividend yield (currently 3.91%)
- Focus on companies with strong dividend growth records
- Low expense ratio (0.06%)
- 100% qualified dividends (tax-efficient)
- Quarterly dividend payments
- More concentrated portfolio (~100 holdings)
What is DIVO?
DIVO (Amplify CWP Enhanced Dividend Income ETF) is an actively managed ETF that invests in high-quality large-cap dividend-paying stocks while also employing a tactical covered call strategy to generate additional income.
Key characteristics of DIVO:
- Higher dividend yield (currently 4.70%)
- Monthly dividend payments
- Higher expense ratio (0.55%)
- Tactical covered call strategy on individual stocks
- Actively managed portfolio
- May have less capital appreciation potential due to covered calls
Key Differences Between SCHD and DIVO
| Feature | SCHD | DIVO |
|---|---|---|
| Management Style | Passive (Index-based) | Active |
| Investment Strategy | Pure dividend growth focus | Dividend + covered call strategy |
| Current Yield | ~3.91% | ~4.70% |
| Expense Ratio | 0.06% | 0.55% |
| Distribution Frequency | Quarterly | Monthly |
| Tax Efficiency | Higher (100% qualified dividends) | Lower (option income not qualified) |
| Potential Capital Appreciation | Higher (no upside cap) | More limited (due to covered calls) |
| Income Growth Potential | Higher (11.44% 5-year avg) | Lower |
| Market Behavior | Better in bull markets | Better in sideways/low-volatility markets |
| Ideal For | Long-term dividend growth | Current income needs |
Frequently Asked Questions
Which has performed better historically - SCHD or DIVO?
Historical performance varies depending on the timeframe. Over the past year, DIVO has returned approximately 11.15% compared to SCHD's 3.40%. However, SCHD has shown strong long-term performance with a 10-year annualized return of approximately 10.47%. DIVO tends to perform better in sideways or volatile markets where its covered call strategy adds value, while SCHD often outperforms in strong bull markets where capital appreciation is unrestricted.
Are SCHD and DIVO good for retirement income?
Both ETFs can be excellent choices for retirement income, but they serve different purposes. DIVO provides higher immediate income with monthly distributions, making it attractive for retirees who need current cash flow. SCHD offers growing income over time through its dividend growth strategy, which can help protect against inflation. Many retirees benefit from holding both: DIVO for higher current income and SCHD for growing income to maintain purchasing power over a long retirement.
How does the tax treatment differ between SCHD and DIVO?
SCHD generally offers more favorable tax treatment. Its dividends are 100% qualified, which means they are taxed at the lower qualified dividend tax rates (0%, 15%, or 20% depending on your tax bracket). DIVO's distributions come from a mix of dividends and option premium income. The option income portion is typically taxed as ordinary income (at higher rates), making DIVO potentially less tax-efficient, especially for investors in higher tax brackets. Consider holding DIVO in tax-advantaged accounts like IRAs to mitigate this tax difference.
What's the impact of the expense ratio difference?
The expense ratio difference between SCHD (0.06%) and DIVO (0.55%) is significant over time. On a $100,000 investment, SCHD costs $60 annually while DIVO costs $550. This 0.49% difference compounds over time and can impact total returns. However, DIVO's active management and covered call strategy may generate additional income that outweighs the higher fee. Consider whether DIVO's additional yield (currently about 0.79% higher than SCHD) justifies its higher expense ratio in your specific situation.
Should I own both SCHD and DIVO?
Many investors benefit from owning both ETFs as they complement each other well. SCHD provides long-term dividend growth potential with lower expenses and better tax efficiency, while DIVO offers higher current income with monthly distributions. A combination allows for both immediate income needs and long-term income growth. The optimal allocation depends on your personal financial goals, time horizon, and income needs. Younger investors might favor a higher allocation to SCHD, while those nearer to or in retirement might prefer a higher allocation to DIVO for the enhanced current income.
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