Compare the performance of dividend investing and growth investing over time
Current SCHD Dividend Yield: 3.91% | SCHG Dividend Yield: 0.41% (2025)
Investing $10,000 over a 15-year period
| Year | SCHD Value | SCHD Income | SCHG Value | SCHG Income | Difference |
|---|
| Feature | SCHD | SCHG | Better Option |
|---|---|---|---|
| Long-term Growth Potential | Moderate (historical avg: 10.5%) | High (historical avg: 15.9%) | SCHG |
| Income Generation | High (3.9% yield), with strong growth potential | Low (0.4% yield) | SCHD |
| Dividend Growth | High (11.44% 5-year rate) | Low to Moderate | SCHD |
| Portfolio Stability | Higher (less volatile) | Lower (more volatile) | SCHD |
| Inflation Protection | Good (dividend growth helps offset inflation) | Good (higher returns typically outpace inflation) | Tie |
| Technology Exposure | Lower (9.8% sector allocation) | Higher (42.5% sector allocation) | SCHG |
| Expense Ratio | 0.06% | 0.04% | SCHG |
| Tax Efficiency (Taxable Accounts) | Moderate (higher dividends taxed annually) | Higher (more tax-deferred growth) | SCHG |
The Schwab U.S. Dividend Equity ETF (SCHD) tracks the Dow Jones U.S. Dividend 100 Index, focusing on high-quality dividend-paying U.S. stocks with a strong record of consistently paying dividends.
The Schwab U.S. Large-Cap Growth ETF (SCHG) tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, providing exposure to large U.S. companies with strong growth characteristics.
| Time Period | SCHD Return | SCHG Return | S&P 500 Return |
|---|---|---|---|
| 1-Year | 12.8% | 20.6% | 17.2% |
| 3-Year (Annualized) | 10.3% | 11.4% | 10.9% |
| 5-Year (Annualized) | 13.5% | 19.8% | 15.7% |
| 10-Year (Annualized) | 10.6% | 15.9% | 13.2% |
Historical performance data shows SCHG has generally delivered higher total returns over most time periods, while SCHD has provided more consistent dividend income and typically lower volatility. SCHG's higher returns are largely due to its significant technology sector exposure, which has been a market leader in recent years.
During market downturns (like 2022), SCHD has typically demonstrated better downside protection due to its focus on stable, cash-generating companies. During strong bull markets driven by growth stocks, SCHG has generally outperformed.
Focus on building a growing stream of dividend income over time, taking advantage of SCHD's quality dividend payers with histories of consistent dividend growth.
"SCHD's strategy prioritizes companies with consistent dividend increases, indicating financial strength and shareholder commitment."
Focus on capital appreciation through exposure to companies with above-average earnings growth potential, accepting higher volatility for potentially higher returns.
"SCHG provides concentrated exposure to growth sectors that have historically generated higher returns but with increased volatility."
Many investors benefit from holding both ETFs in their portfolio, gaining exposure to both dividend growth and price appreciation potential. This approach can provide diversification across investment styles and economic cycles.
Research suggests that a combination of SCHD and SCHG has historically provided better risk-adjusted returns than either ETF alone, with reduced portfolio volatility while maintaining competitive total returns.
The answer depends on your investment goals and time horizon. SCHD typically appeals to income-focused investors who prioritize dividend growth and lower volatility. SCHG is generally better suited for investors primarily seeking capital appreciation who can tolerate higher volatility. Many long-term investors benefit from holding both, as they provide complementary exposures that can perform well in different market environments.
SCHD generates more dividend income, which is taxed annually in taxable accounts (though often at preferential qualified dividend rates). SCHG derives more of its return from price appreciation, which isn't taxed until shares are sold, potentially making it more tax-efficient in taxable accounts. In tax-advantaged accounts like IRAs, these tax differences are less significant.
SCHD has higher allocations to traditional dividend sectors like Consumer Defensive (19.7%), Energy (19.5%), and Healthcare (15.3%), with only 9.8% in Technology. SCHG is heavily weighted toward Technology (42.5%), followed by Consumer Cyclical (15.8%) and Healthcare (11.2%). These sector differences significantly impact performance in different economic environments.
During the 2020 COVID-related market crash, SCHD fell approximately 28.4%, while SCHG declined about 31.8%. SCHD has typically demonstrated better downside protection during market corrections due to its focus on quality companies with strong balance sheets and consistent dividends. However, SCHG has generally recovered more quickly during subsequent bull markets.
Yes, holding both ETFs can provide a balanced approach that captures both dividend income and growth potential. A popular strategy is to adjust the allocation between the two based on your age, investment goals, and market outlook. For example, younger investors might hold more SCHG, while those approaching retirement might increase their SCHD allocation for greater income.
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