NEW YORK — For years, the Schwab U.S. Dividend Equity ETF (SCHD) has been the go-to for dividend hunters seeking a blend of yield, growth, and low costs—a reliable workhorse in portfolios chasing that steady SCHD dividend payout.
But in 2025, the once-unassailable ETF is stumbling, trailing key Vanguard competitors by double digits over the past three years and prompting investors to ask: Has the SCHD stock lost its shine, or is this just a temporary dip in a tech-driven market?
The SCHD ETF, which tracks the Dow Jones U.S. Dividend 100 Index and focuses on companies with consistent dividend increases, boasts a rock-bottom expense ratio of 0.06% and a yield around 3.4%—higher than many peers.
It’s a favorite for its quality tilt, capping individual holdings at 4% to avoid overconcentration.
Yet, as Morningstar analyst Todd Campbell points out in a recent analysis, “If you think that the rally in tech, growth and AI stocks will continue, there’s almost no evidence suggesting that SCHD is ready to outperform any time soon.”
Performance Figures of SCHD vs VIG and VYM
Over the trailing three years, SCHD has underperformed the Vanguard Dividend Appreciation ETF (VIG) and Vanguard High Dividend Yield ETF (VYM) by double digits, lagging not just dividend peers but also broader value and low-volatility funds.
What gives? The SCHD stock’s conservative bent—favoring stable, dividend-growing firms like utilities and consumer staples—has left it exposed in a market dominated by high-flying tech names.
Year-to-date through early October 2025, SCHD has eked out a modest 3.20% gain, per TipRanks data, while the S&P 500 surges ahead.
Its five-year annualized return of 13.43% remains solid, but recent quarters show cracks, with Morningstar downgrading its rating amid the lag.
Vanguard’s VYM, with its broader net of over 500 high-yield stocks and the same 0.06% fee, has edged out SCHD in shorter horizons. Over three years, VYM clocked an 8.32% annualized return versus SCHD’s 6.7%, thanks to heavier exposure to financials and energy that caught a tailwind from rate cuts.
VIG, focusing on dividend growers, mirrors SCHD’s long-term philosophy but has pulled ahead with 11.5% over five years, per Yahoo Finance comparisons.
“SCHD edges out VYM with an annualized return of 11.5% over the same time horizon,” notes a 24/7 Wall St. analysis, but warns that in a growth rally, the SCHD stock’s defensive posture “lags it by about 1% CAGR.”
Investors are noticing. SCHD’s assets under management hover at $65.8 billion, but inflows have slowed as advisors pivot to VYM’s stability (2.8% yield but broader diversification) or VIG’s growth tilt.
Reddit’s r/dividends forum buzzes with debates: “VIG has pretty similar returns to SCHD, while VYM lags it by about 1% CAGR leading to a heavy underperformance,” one user posted, sparking 57 comments on why the SCHD dividend allure persists despite the stumbles.
TipRanks pegs SCHD as a “Moderate Buy” with a $30.50 target implying 12.21% upside, but cautions its Smart Score of 7 suggests market-line performance at best.
A 3-for-1 Split Boosts Accessibility, But YTD Flatline Raises Eyebrows
Adding to the mix, SCHD underwent a 3-for-1 share split effective October 10, 2024, tripling shares outstanding and dropping the price to around $27—making the SCHD stock more approachable for retail traders.
“Forward share splits increase the number of shares outstanding and decrease the Net Asset Value per share,” Schwab noted, aiming to broaden appeal without altering fundamentals.
Yet, as 24/7 Wall St. reported in October 2025, the SCHD ETF has returned “more or less 0.0% year-to-date” amid the bull market, a “depressing milestone” tied to its cap on single-stock weightings at 4%—limiting exposure to mega-caps like Nvidia or Apple that have driven gains.
“Exactly flat,” the analysis lamented, pinning the underperformance on SCHD’s structure favoring “defensive companies” over growth darlings.
Holdings like Coterra Energy (CTRA) and Schlumberger (SLB) offer upside potential per TipRanks, but the ETF’s tilt toward energy and financials hasn’t offset tech’s dominance.
CNBC’s October 9 update showed positive fund flows but noted trailing returns as of August 8, 2025, lagging peers.
Dividend Investors Weigh In: Yield vs. Total Return Trade-Off
For SCHD dividend loyalists, the yield remains a siren call—3.4% tops VYM’s 2.8%, per ETF Database comparisons.
“If the dividend is a priority, I’d recommend investing in SCHD over VYM since it boasts of a higher yield,” advised 24/7 Wall St. in January 2025, despite VYM’s edge in diversification with 500+ holdings.
PortfoliosLab’s tool echoes this, showing SCHD’s Sharpe ratio slightly ahead over 10 years, but VYM pulling even on volatility.
Composer Trade’s backtest favors long-term SCHD holders for risk-adjusted returns but notes VYM’s stability suits income seekers.
“Long-term investors looking for dividend growth may favor SCHD, while those seeking immediate and stable income might lean toward VYM,” etf.com concluded in February 2025, predicting dividend ETFs’ appeal amid uncertainty.
Wall Street Horizon’s dividend calendar confirms SCHD’s reliability: The Q3 2025 payout of $0.2604 hit ex-date September 24, with the next due December 10.
Yet, as markets favor growth, the SCHD stock’s flat YTD raises doubts—will a value rotation revive it or is Vanguard’s broader net the smarter bet?
For dividend die-hards, SCHD’s quality screen still shines, but 2025’s lag has many rethinking allocations. As Campbell asks, “Is it time to sell the Schwab Dividend ETF?”
The answer might depend on your horizon—and whether you believe the SCHD dividend will outlast the tech frenzy.
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