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Earn Funds Compared: SCHD vs VYM vs DGRO

Side-by-side comparison

Verify current data with fund sponsors. Numbers change daily.

The key takeaway

SCHD and VYM are nearly identical in cost (0.06%) but differ significantly in strategy, yield, and performance. SCHD's quality dividend approach has delivered higher returns over the past 5 years (~13% vs ~10%) because it concentrates on companies with strong fundamentals rather than simply high yields. VYM's broader, higher-yield approach provides more diversification but lower total returns.

DGRO sits between the two: more diversified than SCHD but with a quality focus similar to SCHD. Its 0.08% expense ratio is slightly higher, and its lower yield (~2.5%) reflects the dividend growth orientation — companies that grow dividends tend to pay lower initial yields.

SCHD — The quality dividend pick

Schwab US Dividend Equity ETF (SCHD) is the Earn slot's default recommendation for most investors. It uses a rules-based screen to identify US companies with strong fundamentals, consistent dividend growth, and reasonable valuations. The result is a concentrated portfolio of ~103 high-quality dividend growers that has delivered exceptional returns — roughly 13% annually over the past 5 years.

SCHD's quality focus means it tends to underperform in pure yield-chasing environments but outperforms over longer periods because the underlying companies are fundamentally stronger. The low P/E ratio (~14) reflects value-oriented screening, and the concentrated portfolio means each holding has meaningful impact.

VYM — The high-yield broad pick

Vanguard High Dividend Yield ETF (VYM) takes a different approach: it screens for high dividend yield across a broad universe of ~450 stocks. The result is more diversified than SCHD but with a lower average quality score. VYM's yield (~2.9%) is modestly higher than SCHD's (~3.4% — wait, actually SCHD yields more), and its broader holdings mean less concentration risk.

VYM's approach is simpler to understand: buy the highest-yielding US stocks and collect the dividends. The tradeoff is that high yield can sometimes signal distress rather than quality, which is why VYM's long-term returns trail SCHD. But for investors who prioritize yield over total return, VYM is a solid choice.

DGRO — The growth dividend pick

iShares Core Dividend Growth ETF (DGRO) focuses on companies with a track record of growing their dividends. It holds ~270 stocks — more than SCHD but fewer than VYM — and applies a quality screen similar to SCHD's. The result is a fund that emphasizes dividend growth over current yield, which means lower initial yield (~2.5%) but potentially higher dividend growth over time.

DGRO's 0.08% expense ratio is slightly higher than SCHD and VYM, and its performance has been solid but not exceptional. It's a good fund — there's nothing wrong with it — but SCHD does the same job at lower cost with better long-term returns.

Other Earn slot options

Beyond the core three, the Earn slot includes several specialized funds:

These specialized funds serve specific investor profiles. JEPI is for income-focused investors who don't care about capital appreciation. NOBL and VIG are for dividend growth purists. HDV is for quality-focused investors who want some income. None of them are wrong — they just serve different priorities than the core three.

Who should use what

The honest answer: SCHD is the best Earn slot pick for most investors. It delivers the best combination of yield, quality, and long-term returns at a competitive cost. VYM is a fine alternative if you prefer broader diversification. DGRO and the specialized funds serve specific investor profiles but don't outperform SCHD on a risk-adjusted basis.