SCHD Is Crushing the Vanguard High Dividend Yield ETF (VYM) This Year. I Predict That Advantage Is About to Fade.
The Schwab U.S. Dividend Equity ETF and Vanguard High Dividend Yield ETF have some important differences long-term investors won't want to gloss over.
The Vanguard High Dividend Yield ETF (VYM) has experienced outperformance compared to the Schwab U.S. Dividend Equity ETF (SCHD) this year due to its more balanced sector weightings and lower turnover rate. The Schwab ETF's heavy concentration in energy stocks, which have recently peaked, has contributed to its superior YTD performance, but this sector weight has been decreasing as the sector matures.
The Vanguard ETF, on the other hand, boasts a more diversified portfolio across sectors like healthcare and consumer staples, which tend to grow faster over the long term. While the SCHD has yielded a higher income, the VYM's focus on quality earnings growth and reduced turnover rate positions it as the better long-term investment option.
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