The Schwab U.S. Dividend Equity ETF (SCHD) has become immensely popular among dividend investors. And it has a lot to show for it.
SCHD offers a high yield of about 4%. It also screens for high-quality companies with strong financials and consistency in paying out dividends. And it has maintained a hefty five-year return of over 40%.
Plus, you get all this for the very reasonable expense ratio of 0.06%.
But, SCHD may have some drawbacks. Other funds also invest in high-quality companies and offer higher yields. Some competing funds are also more diversified. In fact, SCHD is not too invested in the tech sector, which has been booming with the help of advances in artificial intelligence (AI). Only about a combined 12% of its portfolio is composed of companies in information technology and communication services.
And while it’s heavily invested in defensive sectors like consumer staples and healthcare, it lacks in utilities (0.04%).
So it’s clear that other funds can fill these holes. So let’s take a look at 6 of such ETFs.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) offers a slightly higher yield than SCHD at 4.02%. And it also invests in high-quality companies.
But SPHD also screens for stocks with high yields and low volatility. Some high-yielding stocks may also be highly volatile, indicating those companies may be in distress. So SPHD’s strategy could mitigate risk in your portfolio.
Plus, SPHD has a five-year return of over 31%. And it holds around $3 billion in net assets. The fund’s main holdings are companies in the real estate, consumer staples and utilities sectors.
Vanguard Dividend Appreciation ETF (VIG)
The Vanguard Dividend Appreciation ETF (VIG) also focuses on high-quality companies. But it specifically seeks out firms that have consistently increased their dividends year over year. This could provide you with a reliable and potentially growing income stream in the long run.
It’s also performed better than SCHD over time with a five-year return of over 63%. This may be due to its high concentration in the information technology sector, which covers its top holdings. VIG’s strategy could also give investors strong capital appreciation potential.
Moreover, VIG has a smaller expense ratio at 0.05%.
However, VIG’s yield is much smaller at 1.62%. So it may be more suitable for those seeking long-term total return rather than straight income.
Vanguard High Dividend Yield ETF (VYM)
The Vanguard High Dividend Yield ETF (VYM) has a smaller yield than SCHD at 2.44%. However, VYM is far more diversified than SCHD. It invests in more than 500 stocks across 10 sectors. It focuses on stocks projected to have higher-than-average yields. VYM is heavily invested in the financials, technology and industrials sectors.
And the fund has also outperformed SCHD with a five-year return of nearly 65%. Plus, it has the same expense ratio of SCHD at 0.06%.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
The Amplify CWP Enhanced Dividend Income ETF (DIVO) has a higher yield than SCHD at about 5%. It also performs closely with SCHD. DIVO has a five-year return of around 42%.
But DIVO is an actively managed fund that generates income in two ways. Like SCHD, it invests in stocks with strong financials. But DIVO also engages in a strategy of writing covered calls on those stocks. Moreover, DIVO also seeks to reduce volatility.
DIVO’s main holdings are in the financials, information technology and consumer discretionary sectors.
But as an actively managed fund, it has a higher expense ratio of 0.56%.
JPMorgan Equity Premium Income ETF (JEPI)
When it comes to yield, JEPI dwarfs SCHD. JEPI has a yield of over 8%, making it especially attractive to income seekers like retirees.
JEPI takes a two-step approach to gathering income. It invests in large-cap stocks with low volatility. And it also sells options. Moreover, this actively managed fund uses its proprietary research to find over-and undervalued stocks with attractive risk/return characteristics.
Many of its top holdings include companies in the group Wall Street calls The Magnificent Seven. It’s heavily invested in the information technology, healthcare and industrial sectors.
The fund has earned itself a Morningstar Silver Medalist rating. But its expense ratio is also higher than SCHD’s at 0.35%.
Amplify CWP International Enhanced Dividend Income ETF (IDVO)
The Amplify CWP International Enhanced Dividend Income ETF (IDVO) has outperformed SCHD with a five-year return of nearly 68%. It also has a higher yield of around 5.43%.
Plus, IDVO gives your portfolio exposure to companies around the world. This could offer even more diversification. IDVO produces income by investing in stocks screened for financial strength and other factors. It also writes covered calls on those stocks. Its main holdings are in the financials, materials and industrial sectors.
But as an actively managed fund, it has an expense ratio of 0.66%.