2 Dividend ETFs That Beat SCHD for Growth and Yield

The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) is one of the gold standards as far as dividend-focused ETFs are concerned. With a nearly 4% yield, the American equity basket delivers on the income front while also allowing for a good amount of growth. Indeed, income investors know that there’s a balance to strike between growth (capital gains potential) and dividend yield.

And while the SCHD is still a passive retail investor favorite that makes sense to buy in almost any market environment, I do think that there are other impressive ETF offerings out there that measure up quite well. Indeed, when looking at dividend ETFs, it’s not all about the size of the yield. Investors must also consider the value to be had, the dividend health, growth potential, and, of course, the magnitude of volatility to be expected.

The SCHD is great. But its balance of growth and yield won’t be the right fit for everyone

Indeed, it can be quite tricky to tell which flavor of ETF is the best to pick at any given time. Indeed, it’s not hard to imagine many new passive investors are simply content with going with the highest-yielding one that’s had the best performance over the past two, three, five, or ten years. Going by past performance as a gauge for what to expect in the future isn’t a great idea, especially if you’re thinking about going for a concentrated thematic ETF.

In any case, I think the best way to stack up ETFs is to understand how the sausage is made. In other words, which stocks comprise the ETF at any given time, their weighting, and the investment strategy or methodology (does an ETF simply mirror an index? Or is there some value added by management?) used. And, of course, one should shoot to keep fees low. Arguably, the SCHD delivers on all fronts, but for those seeking more yield or more growth, the following are also noteworthy.

Fidelity High Dividend ETF: For more of a growth jolt

For those who want more growth than the SCHD, the Fidelity High Dividend ETF (NYSEARCA:FDVV) is nothing short of intriguing. It’s topped the SCHD’s performance over the past five years (96% gain versus 59% for the SCHD), thanks in part to a unique mix of large-cap growth stocks with high-yield dividend stocks sprinkled throughout. Not quite the traditional makeup of your run-of-the-mill U.S. equity dividend ETF. But it’s one that younger investors can get behind.

You’re getting a decent amount of exposure to some of the growthy (and perhaps better) Magnificent Seven Members, with weightings around 4-6%. It’s these AI winners that contribute to the capital gains potential and overall growth of the FDVV. Additionally, you’re also getting some high-yield heavyweights, including Exxon Mobil (NYSE:XOM), which has a 3.7% yield, and Altria (NYSE:MO) with its nearly 7% yield. 

If you want exposure to the blue-chip growth darlings at the core of an ETF with some lower-beta defensive dividends to pull the yield a bit higher, the FDVV is an outstanding choice. Arguably, it’s my favorite high-growth dividend ETF out there for investors who want something yield-heavier than the S&P but “growthier” than the SCHD.

Global X SuperDividend U.S. ETF: For more yield (and deeper value)

If you want more yield than the SCHD or FDVV and are content with minimal capital gains in any given year, the Global X SuperDividend U.S. ETF (NYSEARCA:DIV) seems worth a look. While you may be a tad underwhelmed by the longer-term chart (DIV shares are up only 20% in the last five years), I do think that the chunky 6.13% yield more than makes up for it. But it’s not the yield that makes the DIV such a strong contender to an ETF like the SCHD.

Many of the top stocks that make up the DIV have really low betas, making them more insulated come the next correction in the S&P. Furthermore, many such names in the DIV have already been penalized greatly in recent years. With an 11.9 times trailing price-to-earnings (P/E), the DIV stands out as a deep-value ETF that can help investors improve their defensive positioning. On the surface, the DIV looks like a riskier ETF destined for subpar performance. But if you’re a fan of value and want less cyclicality, I’d argue the DIV adds a lot to the table.

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