Quick Comparison
| Feature | SCHD | VYM |
|---|---|---|
| Strategy | Quality Dividend Growth | High Dividend Yield |
| Holdings | ~100 | ~400+ |
| Holdings Overlap | ~20% | |
| Expense Ratio | 0.06% | 0.06% |
| Dividend Yield | ~3.25% | ~2.25% |
| Dividend Focus | Growth + Quality Metrics | High Yield Screening |
How Much Do SCHD and VYM Overlap?
The overlap between SCHD and VYM is much lower than many investors expect. At roughly 19%, these ETFs share some large dividend-paying companies but differ meaningfully in overall portfolio construction.
SCHD holds only about 100 stocks selected based on quality metrics like return on equity, cash flow, and dividend growth history — making it more concentrated. VYM, by contrast, holds over 400 stocks screened primarily for higher current dividend yield.
Key insight: At just 19% overlap, SCHD and VYM are one of the few popular ETF pairings where holding both genuinely adds diversification rather than duplicating exposure.
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Dividend Strategy Differences
SCHD: Quality & Dividend Growth
SCHD focuses on financially strong companies with a history of consistent dividend growth. The fund screens for fundamentals including strong free cash flow, high return on equity, consistent dividend growth, and sustainable payout ratios. This results in a concentrated portfolio tilted toward quality and stability.
VYM: High Dividend Yield
VYM targets stocks with above-average dividend yields relative to the broader market. It includes a wider range of companies and sectors. Because of its broader diversification, VYM may provide slightly smoother sector exposure but with less focus on dividend growth quality metrics.
Sector Exposure Differences
Although both funds hold many dividend-paying large-cap companies, sector weightings differ. SCHD often leans more toward industrials and financials, while VYM has broader exposure across utilities, consumer staples, and healthcare. These structural differences contribute to the relatively low overlap percentage.
Performance & Income Comparison
Historically, SCHD has often outperformed VYM on total return during periods where quality dividend growth stocks lead the market. However, in high-yield-driven cycles, VYM may offer stronger income-focused returns. Total returns and yield differences vary depending on market conditions.
Should You Own Both SCHD and VYM?
Because overlap is only around 19%, combining SCHD and VYM can genuinely increase diversification within a dividend-focused portfolio. Unlike most popular ETF pairings, these two funds offer complementary strategies rather than duplication.
- Choose SCHD alone if you want a concentrated bet on quality dividend growers.
- Choose VYM alone if you want broader high-yield exposure across 400+ stocks.
- Own both if you want to blend quality dividend growth with broad high-yield income.
Bottom line: SCHD and VYM are one of the rare ETF pairings where holding both actually makes sense. With only 19% overlap and distinctly different selection criteria, they provide complementary dividend income strategies rather than redundant exposure.
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