VIG vs SCHD vs VYM: The Yield-and-Growth Comparison

These are the three largest US dividend ETFs, together holding more than $340bn. They are compared constantly, usually with a single framing: VIG grows its dividend, SCHD yields more, VYM sits in the middle.

The measured numbers do not entirely support that story. In particular, one of these funds has been beating another on both yield and growth.

Growth figures are the median year-over-year change in the distribution across every complete calendar year with data. Live versions are on the Dividend ETF Calculator.

SCHD yields more than VYM and has grown its dividend faster over the measured window — 3.18% against 2.34% on yield, 10.9% against 5.0% on growth.

On those two numbers alone, VYM looks dominated. If that held permanently, the comparison would be over.

It almost certainly does not hold permanently, and understanding why is more useful than the ranking itself.

The window is short and unusual. Dividend history for these funds only goes back to 2020 — the start of a pandemic, a period of unusually strong corporate earnings, and a stretch of high inflation that pushed nominal dividends up across the board. Six years is not enough to separate two strategies this similar.

The methodologies are genuinely different. SCHD selects about 100 stocks on a quality screen — return on equity, cash flow to debt, dividend consistency — and weights them by market cap within a capped framework. VYM tracks the FTSE High Dividend Yield Index, which is much broader at roughly 400 holdings and screens primarily for forecast yield.

Broader means more diversification and less concentration risk. Concentrated in a quality screen has historically meant faster dividend growth. Which matters more depends on what you are trying to do.

VIG is doing something else entirely. Its 1.54% yield looks unimpressive next to the other two, and it is the largest of the three anyway. VIG screens for companies that have raised their dividend for at least ten consecutive years — it selects for growth in the payout, not its current size. That produces a low starting yield and steady growth, which is a different product rather than a worse one.

The real argument for VIG is what happens to your income over a long holding period. A low yield growing quickly can overtake a high yield growing slowly — but it takes years, and the crossover point matters.

On $100,000 held for twenty years, using each fund’s measured growth rate:

The projected crossover between VIG and VYM happens somewhere around year 18. SCHD, on these inputs, is ahead from the start and stays there.

That is the case for SCHD over this particular six-year window, and the case for treating the window as the fragile part of the argument rather than the conclusion.

Cost is not a factor. All three charge between 0.05% and 0.06%. The difference is $1 per $100,000 per year. Ignore it.

Concentration is a factor.SCHD holds roughly 100 names against VYM’s 400-plus. SCHD’s top holdings — typically energy and consumer staples — can be a large share of the fund. That cuts both ways.

What you are trying to accomplish is the deciding factor. If you want the highest income today, SCHD. If you want the widest diversification, VYM. If you are early in accumulation and care about the payout in twenty years rather than today, VIG.

All of this is about income. Income is not return.

VIG has historically delivered a larger share of its total return as price appreciation rather than distribution, which is also more tax-efficient in a taxable account — capital gains are not taxed until you sell, while dividends are taxed annually whether you reinvest or not.

A fund paying 1.5% that appreciates steadily can leave you better off than one paying 3% with slower price growth, even though the second feels more like income. Which of those you want depends on whether you need the cash now — a question about your situation, not about the funds.