Investors who want higher current yield than SCHD provides and are comfortable with sector concentration risk. Anyone building a dividend portfolio that pairs SCHD (broad quality) with HDV (concentrated high yield) to maximize income while staying in investment-grade territory. Investors who understand energy price cycles and can tolerate the extra volatility they bring.
Investors who want maximum diversification — VYM holds 569 stocks across all sectors. Retirees who need predictable income and can't tolerate the distribution volatility that comes with energy concentration. Anyone uncomfortable with a single sector (energy) making up nearly a quarter of their dividend portfolio. Investors looking for dividend growth — HDV prioritizes current yield over compounding payouts.
HDV trades diversification for yield. Its ~75 holdings are concentrated in high-yielding sectors, with energy and healthcare together making up over 40% of the portfolio. This produces a higher yield than SCHD's more balanced approach, but it also means HDV is more sensitive to sector-specific downturns — particularly oil price declines that can pressure both the stock prices and dividend distributions of its largest holdings (Exxon Mobil and Chevron account for nearly 15% combined). The quality screen (Morningstar moat + financial health) keeps it from drifting into junk territory, but it doesn't eliminate sector risk.
Key metrics
Fund snapshot
| Ticker | HDV (AMEX) |
| Underlying Index | Morningstar Dividend Yield Focus Index |
| Expense Ratio | 0.08% |
| AUM (approx.) | ~$13–14 billion |
| Inception Date | March 29, 2011 |
| Distribution Frequency | Quarterly (Mar, Jun, Sep, Dec) |
| Sponsor | BlackRock (iShares) |
| Number of Holdings | ~75 |
| 30-Day SEC Yield | ~2.8–3.2% (verify current) |
| Avg Daily Volume | ~3.5 million shares |
Verify current data at iShares' official fund page. Yields and AUM change.
Performance snapshot
| Period | HDV Return | Dividend Category Avg | S&P 500 (VOO) |
|---|---|---|---|
| 1 Year | ~5–9% | ~4–6% | underperforms |
| 3 Year (ann.) | ~4–7% | ~3–5% | tracks |
| 5 Year (ann.) | ~8–11% | ~7–9% | underperforms |
| 10 Year (ann.) | ~7–10% | ~6–8% | underperforms |
Returns shown as approximate ranges. Verify exact figures at iShares. Past performance is not indicative of future results.
HDV's performance profile reflects its concentrated, yield-focused approach. Over the past decade, it has generally underperformed the S&P 500 because its heavy energy and consumer defensive weighting means less exposure to the technology sector that drove most of the index's returns. However, HDV tends to hold up better than growth-heavy funds during drawdowns — the quality screen and high dividend yields provide some downside cushion. The key insight: HDV is not a total-return fund. It is an income fund that accepts lower capital appreciation in exchange for higher current yield.
Sector exposure
| Consumer Defensive | ~24% |
| Energy | ~22% |
| Healthcare | ~20% |
| Financials | ~10–12% |
| Industrials | ~8–10% |
| Communication Services | ~5–7% |
Sector weights are approximate and based on the most recent fund holdings. Verify current allocations with the fund sponsor.
Top 10 holdings
| Exxon Mobil (XOM) | ~8.4% |
| Chevron (CVX) | ~6.4% |
| Johnson & Johnson (JNJ) | ~5.7% |
| AbbVie (ABBV) | ~5.4% |
| Procter & Gamble (PG) | ~4.5% |
| Philip Morris International (PM) | ~4.2% |
| Home Depot (HD) | ~4.1% |
| Coca-Cola (KO) | ~3.9% |
| Progressive (PGR) | ~3.8% |
| Merck (MRK) | ~3.8% |
Top 10 holdings represent roughly 50% of total assets, reflecting the fund's concentrated approach. Data sourced from Yahoo Finance, May 2026. Verify current holdings with iShares.
What HDV is
HDV is the iShares Core High Dividend ETF, managed by BlackRock under its iShares brand. It tracks the Morningstar Dividend Yield Focus Index, which screens for companies that pay dividends and pass Morningstar's proprietary economic moat rating and financial health tests. The index weights qualifying stocks by their dividend yield, producing a portfolio of roughly 75 U.S. large-cap stocks with above-average current income.
The screening methodology is what distinguishes HDV from other high-yield ETFs. Unlike funds that simply buy the highest-yielding stocks (which can include distressed companies with unsustainable payouts), HDV requires a Morningstar economic moat rating — meaning the company has a durable competitive advantage that protects its profits over time — and passes a financial health score based on factors like debt-to-equity, interest coverage, and return on equity. This quality overlay is designed to filter out yield traps: companies with high yields that exist because the market expects their dividends to be cut.
The result is a fund that sits between SCHD's broad quality-dividend approach and SPYD's pure highest-yield screen. HDV yields more than SCHD in most environments because it concentrates yield into fewer names, but it carries less junk risk than SPYD because of the Morningstar quality filter. The tradeoff is sector concentration — energy and healthcare make up over 40% of the portfolio, which creates meaningful exposure to oil price cycles and pharmaceutical regulatory risk.
HDV was launched on March 29, 2011, making it one of the older high-yield dividend ETFs. It has grown to approximately $13–14 billion in assets under management, which is substantial but smaller than SCHD's ~$50+ billion. The fund pays dividends quarterly and has an expense ratio of just 0.08%, which is among the lowest for actively-screened dividend ETFs.
Cost analysis
HDV's expense ratio of 0.08% is very competitive for a dividend ETF with an active screening methodology. To put it in context: SCHD charges 0.06%, VYM charges 0.06%, and VIG charges 0.06%. HDV's slightly higher fee reflects the Morningstar index licensing cost — BlackRock pays Morningstar for the right to use their dividend yield focus methodology, and that cost is passed through as a fraction of a basis point.
At 0.08%, HDV costs $8 per year per $10,000 invested. Over a 30-year holding period with a 7% annual return, that $8 annual fee would cost you roughly $900 in total — a negligible amount compared to the income generated by a ~3% yield ($300 per year on $10,000). The expense ratio is not a meaningful differentiator between HDV and its peers. What matters more is the screening methodology: does Morningstar's moat + financial health screen actually produce better dividend sustainability than SCHD's four-metric quality screen? That is an empirical question, but the evidence suggests both approaches effectively filter out the worst yield traps.
The real cost consideration with HDV is not the expense ratio — it's the sector concentration risk. When energy prices decline sharply, HDV can underperform SCHD by several percentage points in a given year because its energy weighting is more than double that of SCHD. This is not a fee issue; it's a portfolio construction issue. Investors who buy HDV should understand they are accepting sector risk as part of the yield premium.
Dividend analysis
The key insight: concentrated yield with a quality floor
HDV's dividend profile is defined by two characteristics: concentration and quality screening. The fund holds roughly 75 stocks — about one-third the number in VYM (569) and slightly fewer than SCHD (~100). This concentration means each holding has a larger impact on the overall yield, which amplifies both the upside (higher yield per dollar invested) and the downside (sector-specific risks hit harder).
The Morningstar quality screen provides a floor beneath the yield. Companies in HDV must have an economic moat — a durable competitive advantage like brand strength, switching costs, or network effects — and pass financial health tests including debt-to-equity ratios, interest coverage, and return on equity. This means HDV's yield is not coming from distressed companies with unsustainable payouts; it's coming from profitable, financially strong companies that happen to pay above-average dividends. The most common reason these companies offer high yields is simply that they are mature, cash-generative businesses in sectors where high dividend payout is the norm (energy, consumer staples, healthcare).
Dividend sustainability
| Current yield | ~2.8–3.2% (verify current) |
| Top sector exposure | Energy (~22%), Healthcare (~20%), Consumer Defensive (~24%) |
| Screening methodology | Morningstar economic moat + dividend sustainability screen; weights by yield |
| Key risk | Sector concentration — energy price cycles can significantly impact distributions |
HDV's dividend sustainability is generally strong because of the Morningstar quality screen, but it is not immune to sector-specific shocks. The fund's energy weighting (~22%) means that when oil prices fall — as they did in 2014–2016 and 2020 — HDV faces a double hit: (a) the stock prices of Exxon Mobil and Chevron decline, reducing NAV, and (b) those companies may slow or pause dividend growth during downturns, reducing future distributions. In practice, both XOM and CVX maintained their dividends through most downturns because they are cash-generative giants with strong balance sheets — but the yield on those holdings compresses when stock prices fall, which mechanically reduces HDV's overall yield until prices recover.
HDV vs. the competition
This is the most important comparison for HDV because both funds compete in the same Earn slot and serve similar income- seeking investors. The key difference is philosophy: SCHD uses a four-metric quality screen (cash flow to debt, return on equity, earnings yield, dividend growth) that produces a broadly diversified portfolio of ~100 stocks with balanced sector exposure and a ~3.5% yield. HDV uses Morningstar's moat + financial health screen with yield-based weighting, producing a more concentrated portfolio of ~75 stocks with heavy energy (~22%) and healthcare (~20%) concentration and a similar ~3% yield.
SCHD is the better standalone Earn fund for most investors because of its diversification. HDV works best as a complement — add it alongside SCHD if you want to boost yield without going into junk territory, accepting that your portfolio will be more sensitive to energy price cycles. Think of SCHD as your dividend foundation and HDV as the yield booster on top. Together they give you both breadth and depth in income generation.
The difference here is concentration versus breadth. HDV holds roughly 75 stocks concentrated in high-yielding sectors, while VYM holds approximately 569 stocks spread across all sectors of the U.S. market. Both target high dividend yield, but they reach it through different means: HDV by screening for quality and concentrating yield, VYM by buying almost everything that pays a above-average dividend.
VYM yields slightly more than HDV in most environments (~3% vs ~2.8–3%) because its broader universe includes some higher-yielding names that HDV's quality screen would exclude. But VYM also holds lower-yielding stocks that drag down the average, while HDV's concentration ensures every holding contributes meaningfully to yield. If you want maximum diversification and don't mind slightly lower per-stock impact, pick VYM. If you want concentrated high yield with a quality floor and accept sector risk, pick HDV.
SPYD (SPDR Portfolio S&P 500 High Dividend ETF) screens for the highest-yielding stocks in the S&P 500 without a quality overlay. It yields more than HDV — typically around 4% or higher — but it also holds companies with weaker balance sheets and less durable competitive advantages. SPYD's yield comes partly from genuinely high-paying companies and partly from value traps: companies whose stock prices have fallen so much that their yields look attractive but may not be sustainable.
HDV is higher quality than SPYD because of the Morningstar moat and financial health screens. If you want maximum yield and are willing to accept some junk risk, SPYD delivers more income today. If you want high yield with a quality floor that filters out the worst yield traps, HDV is the better choice. For most investors in the Five Fund Frame, HDV's quality screen makes it the preferable high-yield option — you get close to SPYD's yield with significantly less risk of dividend cuts.
Who HDV is for
HDV fits best in the portfolios of investors who have already established a core dividend position with SCHD and want to boost their overall yield without sacrificing quality. It is not typically the right first dividend ETF pick — that role belongs to SCHD, which offers better diversification and less sector risk for most people.
Ideal HDV investors: (1) Existing SCHD holders who want to add a second Earn fund to increase their overall yield by 0.5–1 percentage point without entering junk territory; (2) Investors who understand energy price cycles and are comfortable with the extra volatility that comes from having ~22% of their dividend portfolio in energy; (3) Anyone building a multi-fund Earn allocation where SCHD provides the broad quality foundation and HDV adds concentrated yield on top.
Not ideal for: (1) First-time dividend ETF investors — start with SCHD or VYM; (2) Investors who need maximum income predictability — energy concentration introduces distribution volatility; (3) Anyone uncomfortable with sector concentration — if having a single sector make up nearly a quarter of your portfolio makes you nervous, HDV is not the right pick.
Risks and considerations
Sector concentration risk. This is HDV's most meaningful risk. Energy makes up roughly 22% of the portfolio — more than double the S&P 500's energy weight — with Exxon Mobil and Chevron alone accounting for nearly 15%. Consumer Defensive (~24%) and Healthcare (~20%) add further concentration. Together, these top three sectors make up roughly 66% of the portfolio. When oil prices fall sharply, HDV faces a double hit: declining stock prices from its energy holdings and potential pressure on dividend distributions from those same companies. This is not a theoretical risk — it happened in 2014–2016 and again in 2020, and it will happen again. The question is whether you are comfortable accepting this risk in exchange for higher yield.
Dividend growth lag. HDV prioritizes current yield over dividend compounding. Its underlying companies tend to be mature, cash-generative businesses that pay out a large portion of their earnings as dividends — which is great for current income but means less capital available for reinvestment and growth. Over time, this results in slower dividend growth compared to funds like VIG or even SCHD. If you are buying HDV primarily for yield today, that is fine. But if you expect the fund's distributions to grow rapidly over the next decade, you may be disappointed.
Concentration risk at the holding level. The top 10 holdings represent roughly 50% of total assets — a very concentrated portfolio for an ETF. This means individual company events (a dividend cut at AbbVie, a regulatory setback at Johnson & Johnson) can have a meaningful impact on the fund's performance. While the Morningstar quality screen reduces the probability of catastrophic failures, it does not eliminate single-stock risk entirely.
Total return vs. income mismatch. Like VIG, HDV is positioned in the Earn slot but its primary value proposition is income generation rather than total return. Over full market cycles, HDV has generally underperformed the S&P 500 because of its low technology exposure. Investors who allocate to Earn expecting strong capital appreciation alongside their dividend income may be disappointed by HDV's total return profile. The fund works best when investors understand they are buying current income, not growth.
How HDV fits in the Five Fund Frame
HDV fills the Earn slot as a complement to SCHD, not a replacement. In the Core Three configuration, SCHD is the primary Earn fund and HDV can be added alongside it for investors who want higher yield and accept sector concentration risk.
HDV's role in the Five Fund Frame is as a yield booster on top of SCHD's quality-dividend foundation. Where SCHD provides broad, balanced exposure to high-quality dividend payers across all sectors, HDV concentrates that yield into fewer names with heavier energy and healthcare weighting. Together, they create an Earn allocation that is both diversified (SCHD) and concentrated-yield-enhanced (HDV).
The combined SCHD + HDV approach works because the two funds use different screening methodologies that are not perfectly correlated. SCHD's four-metric quality screen and HDV's Morningstar moat + financial health screen overlap in some holdings but diverge in others, providing meaningful diversification even within the concentrated Earn allocation. An investor allocating 20% to Earn with a 60/40 split between SCHD and HDV gets broad quality exposure plus a yield boost from energy and healthcare concentration — without taking on junk risk.
| Configuration | Earn allocation | SCHD / HDV split | Context |
|---|---|---|---|
| Core Three (simple) | 20% | 100% SCHD | Broad quality dividend exposure. No sector concentration risk. |
| Enhanced Earn | 30–40% | 60% SCHD / 40% HDV | Broad quality plus concentrated yield boost. Accept energy sector risk. |
| Maximum Earn | 50% | 50% SCHD / 50% HDV | Maximum income generation within quality bounds. Highest sector concentration. |