Dividend ETF showdown: SCHD vs. VYM

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In a crowded field of dividend ETFs, how can an investor choose the right one for them? The Schwab US Dividend Equity ETF (NYSEARCA:SCHD) and the Vanguard High Dividend Yield Index ETF (NYSEARCA:VYM) represent high-profile dividend exchange traded funds that often play a part in investing debates.

When breaking down the difference between these funds, market players should look towards performance, liquidity, risks, costs and of course dividend yields. Here's the breakdown of the differences between SCHD and VYM:

Performance: The performance track record of both SCHD and VYM change depending on the timeframe of an investor. Individuals that are looking to hold a fund for long periods of time care about the longer track record. This will favor SCHD, as the ETF is +52.5% and +77.33% over a three- and five-year period. VYM is still up over those timeframes, but by a less impressive +31.8% and +45.6%.

At the same time, shorter-term investors might lean towards the recent performance in VYM, as the fund is +7.3% over six months, +13.9% over one year, and +0.3% YTD. By comparison, SCHD is +4.3% over six months, +10.7% over a one-year period, and -2.6% YTD.

See a below-detailed performance breakdown on both funds over nine different time frames:

Liquidity: Liquidity appears to be a moot point when examining SCHD and VYM -- both are large-scale ETFs with deep pockets. With that being said, VYM does have a slight edge as the fund has $41.2B assets under management compared to SCHD, which has $34.8B to its name.

Risk: Risk and concentration are two important factors to acknowledge. SCHD is the more condensed fund with 105 holdings whereas VYM has 413 names to its portfolio. Moreover, when looking at top 10 concentration, SCHD is more top-heavy with 40.8% of its assets falling inside its top 10, in comparison to VYM’s 23.6%.

Cost: From an expense stance, it’s an even match as both funds report a 0.06% expense ratio. This puts them lower than the world's largest fund, SPDR S&P 500 Trust ETF (SPY), which has a 0.09% expense ratio.

Dividend Yield: SCHD edges out VYM with a 2.83% quarterly dividend yield whereas VYM provides investors with a 2.69% quarterly dividend yield.

For greater insight on SCHD and VYM, check out Seeking Alpha’s complete quantitative and fundamental analysis on both funds.

While SCHD and VYM are two of the most prominent dividend ETFs that market participants tend to gravitate towards, there are other options. Other high-quality funds that are worth analyzing as well are the Vanguard Dividend Appreciation ETF (VIG), iShares Core Dividend Growth ETF (DGRO), iShares Select Dividend ETF (DVY), SPDR S&P Dividend ETF (SDY) as well as many others.

In related dividend news, check out the high dividend-yielding ETF that has outpaced the S&P 500 (SP500) by more than 10% in 2022.