The Schwab U.S. Dividend Equity ETF (SCHD) is a popular choice for investors seeking safe, dividend-paying investments due to its focus on high-quality, dividend-growing companies with strong financials. It tracks the Dow Jones U.S. Dividend 100 Index, holding 103 stocks with consistent dividend growth, low volatility, and a yield of ~4.03% as of mid-2025. However, to identify individual stocks or ETFs similar to SCHD with maximum safety and good returns over a three-year period, we need to prioritize stability (low volatility, strong balance sheets), consistent dividends, and solid performance. Below, I’ll outline some stocks and ETFs that align with these criteria, based on SCHD’s characteristics and recent data.
ETFs Similar to SCHDFor those preferring ETFs like SCHD, here are alternatives with comparable safety, dividends, and three-year performance:
- Vanguard Dividend Appreciation ETF (VIG)
- Why It Fits: Focuses on companies with 10+ years of dividend growth, similar to SCHD but broader (300+ holdings). Low expense ratio (0.06%).
- Dividend Yield: ~1.8% (lower than SCHD but with stronger growth focus).
- 3-Year Return: 25% (8% annualized), slightly below SCHD but less volatile.
- Safety: Diversified across sectors, low beta (~0.8), and high-quality holdings like Microsoft and Walmart.
- SPDR S&P Dividend ETF (SDY)
- Why It Fits: Tracks the S&P High Yield Dividend Aristocrats Index, targeting companies with 20+ years of dividend increases (more stringent than SCHD). Holds ~120 stocks, including 3M and Realty Income.
- Dividend Yield: ~2.6% (closer to SCHD, sustainable with payout ratios ~60%).
- 3-Year Total Return: 22% (7% annualized), slightly under SCHD but with a focus on ultra-reliable dividend payers.
- Safety: Low beta (~0.85), heavy weighting in defensive sectors like utilities and consumer staples. Holdings have strong credit ratings.
- Expense Ratio: 0.35% (higher than SCHD but still reasonable).
- Key Advantage: Strict Dividend Aristocrat criteria ensure maximum dividend reliability.
- iShares Core Dividend Growth ETF (DGRO)
- Why It Fits: Tracks the Morningstar US Dividend Growth Index, focusing on companies with 5+ years of dividend growth (slightly less strict than SCHD). Holds ~400 stocks, including Johnson & Johnson and ExxonMobil.
- Dividend Yield: ~2.4% (sustainable, payout ratio ~55%).
- 3-Year Total Return: 27% (8.5% annualized), closely matching SCHD.
- Safety: Broad diversification reduces single-stock risk, low beta (~0.9), and strong focus on financially stable firms.
- Expense Ratio: 0.08% (very low, close to SCHD).
- Key Advantage: Balances yield and growth, with broader exposure than SCHD.
- WisdomTree U.S. Quality Dividend Growth Fund (DGRW)
- Why It Fits: Tracks the WisdomTree U.S. Quality Dividend Growth Index, emphasizing dividend-paying companies with strong growth and quality metrics (similar to SCHD’s focus on fundamentals). Holds ~300 stocks, including Coca-Cola and PepsiCo.
- Dividend Yield: ~2.0% (lower than SCHD but with growth potential).
- 3-Year Total Return: 30% (9% annualized), slightly outperforming SCHD due to tech exposure (e.g., Microsoft).
- Safety: Low volatility (beta ~0.9), focuses on companies with high return on equity and low debt.
- Expense Ratio: 0.28% (higher than SCHD but justified by active-like screening).
- Key Advantage: Combines dividend income with growth, appealing for balanced returns.
- Vanguard High Dividend Yield ETF (VYM)
- Why It Fits: Tracks the FTSE High Dividend Yield Index, targeting high-yield U.S. stocks (similar to SCHD but with broader exposure, ~500 stocks). Includes JPMorgan Chase and Home Depot.
- Dividend Yield: ~3.0% (closer to SCHD, payout ratio ~50%).
- 3-Year Total Return: 24% (7.5% annualized), slightly below SCHD but consistent.
- Safety: Broad sector exposure, low beta (~0.85), and focus on stable, high-yield firms.
- Expense Ratio: 0.06% (matches SCHD’s low cost).
- Key Advantage: Higher yield than VIG/DGRO with similar safety, ideal for income-focused investors.
Comparison to SCHD
ETF | Yield | 3-Year Annualized Return | Expense Ratio | Beta | # of Holdings |
|---|---|---|---|---|---|
SCHD | 4.03% | ~8–10% | 0.06% | 0.8 | 103 |
VIG | 1.8% | ~8% | 0.06% | 0.8 | ~300 |
SDY | 2.6% | ~7% | 0.35% | 0.85 | ~120 |
DGRO | 2.4% | ~8.5% | 0.08% | 0.9 | ~400 |
DGRW | 2.0% | ~9% | 0.28% | 0.9 | ~300 |
VYM | 3.0% | ~7.5% | 0.06% | 0.85 | ~500 |
Recommendations
- For Maximum Safety: VIG or DGRO offer the broadest diversification and lowest volatility, ideal for risk-averse investors prioritizing stability over high yield.
- For Higher Yield: VYM or SDY provide yields closer to SCHD with strong safety, suitable for income-focused portfolios.
- For Balanced Growth and Income: DGRW offers a mix of dividend growth and capital appreciation, slightly outperforming SCHD over three years.
- Portfolio Suggestion: Combine SCHD (for high yield) with VIG or DGRO (for diversification and growth) to optimize safety and returns over three years.
