SCHD Nears Vanguard's VIG in Dividend ETF Asset Race

The Schwab US Dividend Equity ETF (SCHD) held $113.2 billion in net assets as of September 3, according to Morningstar. The Vanguard Dividend Appreciation ETF (VIG) sits at $130.9 billion, but the gap between the two popular dividend funds is narrowing fast.

SCHD has returned 29.99% year to date, significantly outpacing the S&P 500's 13.18% gain. VIG has returned 11.54% over the same period. Both funds carry a 3-star rating from Morningstar. Their dividend yields differ markedly, with SCHD at 3.1% and VIG at just 1.5%.

What SCHD Is and Why It Has Run Hard

SCHD tracks the Dow Jones U.S. Dividend 100 Index. This index screens companies based on four financial quality metrics: cash flow to total debt, return on equity, dividend yield, and five-year dividend growth rate. A key entry requirement is 10 consecutive years of dividend payments. The top 102 qualifying stocks are selected and weighted.

This process has produced a portfolio heavily tilted toward specific sectors. According to Morningstar, its top holdings are in healthcare, consumer staples, energy, industrials, financials, and technology. Top holdings include Merck, Amgen, Abbott Laboratories, Coca-Cola, Chevron, ConocoPhillips, Verizon, UnitedHealth, Procter and Gamble, and Home Depot.

One analyst cited in the source sees these as "cheap, cash-generative, lower-volatility businesses" that were overlooked during prior tech rallies. A portfolio reconstitution in March pushed SCHD further into healthcare while trimming energy stocks. Combined with a market that has rewarded defensive and value stocks in 2026, this explains much of the fund's 29% gain.

There is a caveat. At roughly 19 times earnings and a 3.1% yield, SCHD is "no longer the dirt-cheap fund it was two years ago," the source states. The easy money from its repricing has largely happened. Also, with the 10-year Treasury yielding around 4.7%, an income-focused investor can get more current yield from government bonds without equity risk.

What VIG Is and Why the Yield Is Lower

VIG follows a different strategy. It tracks the S&P U.S. Dividend Growers Index. This index requires companies to have increased their dividends for at least 10 consecutive years. It also excludes the top 25% highest-yielding qualifiers to avoid potential yield traps.

This sets it apart from SCHD, which focuses more on fundamental financial strength and current dividend yield. The result is a portfolio tilted toward high-quality companies with a strong history of dividend growth, rather than simply maximizing current income.

VIG's top holdings and sector allocation reflect this focus.

This significant weighting in technology and financials is why VIG has returned only 11.54% in 2026 versus SCHD's 29%. When the market rewards defensive sectors, VIG tends to underperform. It is designed for investors seeking dividend growth compounding over decades, accepting a lower starting income in exchange for broader sector diversification and historically lower volatility.

The race for assets under management is not a buy signal. The real framework for choosing is purpose. SCHD earns its place for investors drawing income now or approaching retirement. Its 3.1% yield and quarterly distributions provide meaningful current income. However, the source notes a concentration risk, as SCHD is more dependent on healthcare today than historically, making it vulnerable to sector rotation.

VIG earns its place as a long-term compounder for those seeking quality exposure and a dividend growth engine. The tradeoff is modest current income and potential underperformance in value-led markets like the current one.

The source notes that neither fund is obviously wrong. It also points out that alternatives exist, such as VYM for a broader, higher-yielding option and DGRO for a dividend-growth screen without SCHD's current pharma-heavy tilt. The biggest fund in a category is just the most popular one, not necessarily the best investment.