The Schwab US Dividend Equity ETF has a higher yield and significantly increased its dividends.
However, the Vanguard dividend assessment ETF provided a better overall return on investors.
The displacement of one ETF DNA seems to provide clues that can perform better in the coming years.
10 shares we like more than Vanguard Dividend ETF ›
Diversification is very important for dividend investors. You do not want to depend on only a few companies behind your dividend income, as it may be painful if something is wrong.
This is where funds traded on the stock exchange (ETF) can make life easier. Vanguard Dividend Assessment ETF(New: VIG) and Schwab US DIVIDEND EQUITY ETF(NYSEMKT: SCHD) There are two popular dividend reserves ETFs. Both offer investors in the Blue Chip Blue Chip bucket and are gradually paying investors in increasing dividends.
Any of these ETFs should investors buy? This fool dove deep, and what I found is fascinating. Here’s what you need to know.
Image Source: Getty Images.
Vanguard Dividend Rating ETF sequence S&P US Dividend Growers Indexo Schwab US dividend ownership ETF sequence Dow Jones US DIVIDEND 100 ™ arrow; Both ETFs are primarily related to the major capital dividends shares, and individual companies and their respective weight change over time.
So, in the last 10 years, I looked at which ETF has grown more dividends to compare these two funds. You will probably be guessed that this was the Vanguard dividend evaluation ETF, taking into account its name and attention to the growth of dividends. In addition, his 1.8% yield is about half of his competitor’s 4% yield, and in simple terms, faster dividend stocks are less.
Ycharts VIG dividend data.
Surprisingly, investors have gained better dividend growth from the Schwab US dividend Equity ETF. It is difficult to grow dividends, not enough for the main business growth, so given the reliable growth of the Schwab ETF dividends, you would probably believe that it will have a better overall return on investment over the last decade.
Guess again! The Vanguard dividend estimation ETF is the winner’s price estimation and all return. It’s a bit confusing why this is the case until you deeper. What is going on?
Here are the current best holdings of each ETF along with the latest dividend yield:
The company
ETF percentage
Dividend yield
Broadcom
4.20%
1%
Microsoft
4.12%
0.7%
An apple
3.77%
0.5%
Eli Lilly
3.72%
0.8%
Jpmorgan Chase
3.62%
1.9%
Everything
2.98%
0.6%
Exxonmobil
2.44%
3.8%
MasterCard
2.36%
0.6%
Costco wholesale
2.31%
0.5%
Walmart
2.22%
0.9%
Source: Author chart using data from the ETF Avenue page.
The company
ETF percentage
Dividend yield
Coca-Cola
4.34%
2.7%
Verizon Communications
4.31%
6.2%
Altria Group
4.25%
6.7%
Cisco systems
4.24%
2.5%
Lockheed Martin
4.20%
2.7%
Conocophillips
4.14%
3.6%
Home depot
4.05%
2.5%
Texas instruments
3.94%
3%
Chevron
3.84%
4.9%
Abbvie
3.69%
3.5%
Source: The author created this chart using data from the ETF Avenue page.
A decade ago, the ETF of the Vanguard dividend was approximately 2.1%. Now it is 1.8%, which makes sense when you look at its upper holdings. Outside Exxonmobil, these companies have high income growth and low dividend yields. Investors usually pay more for growth, making the harvest lower.
Schwab ETF’s yield increased from 2.7% to 4% in 10 years. As shown on the second list, almost every highest holder today gives 2.7% or more today. These stocks usually have lower growth and higher dividend yields. Over time, the Schwab US Dividend Equity ETF seems to have changed to slower, deceiving dividend stocks. This helps explain how ETF’s yield and dividend amount can increase, how Schwab did, without the growth of the accompanying and the increase in prices.
Understanding this difference in two ETFs should help determine better investments in your portfolio.
If the main goal is to maximize your direct income, it is difficult to make a mistake on the ETF of the Schwab US dividend shares and its 4% yield. You will still get some price rating. However, I would not expect another decade of growth in dividends of this strength. The initial growth of ETF holdings seems to be lower.
The current composition of the Vanguard dividend ETF is clearly oriented to growth. Therefore, investors should expect to increase dividends faster and increase the overall return over a long period of time. So for most investors who are not retired, the Vanguard dividend rating ETF is better today.
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Jpmorgan Chase is a Motley Fool Money advertising partner. Justin Pope has no position in any of the above shares. Motley fools hold positions and recommend Abbvie, Apple, Chevron, Cisco Systems, Costco Wholesale, Home Depot, Jpmorgan Chase, Mastercard, Microsoft, Texas Instruments, Vanguard Dividende ETFs, Vanguard, Vanguard Walmart. The Motley fool recommends Broadcom, Lockheed Martin and Verizon Communications and recommends the following options: Long 2026. January The Motley fool has a disclosure policy.
Better Dividend ETF Buy Now: Schwab US DIVIDEND EQUTITY ETF or Vanguard Dividend Estimation ETF? initially released by The Motley Fool
