Which Dividend ETF Should You Choose? Comparing 7 Popular Income Funds Including SCHD

The Numbers Don’t Lie: Why Dividend Strategies Outperform

Performance data spanning five decades tells a compelling story. Companies that consistently grow their dividends have delivered an average annual return of 10.24% from 1973 to 2024. Even dividend payers without growth managed 9.20% annually. In stark contrast, non-dividend payers returned just 4.31%, and those cutting dividends actually lost value at (0.89%) per year. The S&P 500 index averaged 7.65% over the same period.

This performance gap reveals why dividend-focused funds have become increasingly popular among investors seeking both income and growth.

A Practical Comparison: Seven ETFs Worth Your Attention

If you have $2,000—or significantly more—to deploy, dividend-focused exchange-traded funds offer an efficient way to gain exposure to multiple income-generating companies through a single purchase. Here’s how seven leading options stack up:

Data as of December 9, 2025 (Source: Morningstar.com)

Unpacking the Leaders

The High-Yield Specialist: SPYD

With a 4.46% yield, State Street’s offering provides immediate income but trades this for moderate long-term appreciation at roughly 9% annually. It appeals to investors prioritizing current cash flow.

The Balanced Performer: SCHD

Schwab’s fund tracks the Dow Jones U.S. Dividend 100 index, holding roughly 100 established companies with at least 10 years of uninterrupted dividend payments. Its 3.74% yield combined with an 11.46% 10-year average return demonstrates how quality matters. Recent holdings include Merck, Cisco Systems, and Amgen. The fund has consistently expanded its payout over many years.

The Growth-Focused Alternative: VIG

Vanguard’s Dividend Appreciation ETF concentrates on companies having raised dividends for at least 10 consecutive years. By excluding steep-yield stocks—which often signal troubled companies—it favors companies with sustainable growth trajectories. The fund holds approximately 338 stocks, topped by Broadcom, Microsoft, and Apple. Its 13.10% 10-year average return reflects this quality bias.

The Preferred Stock Play: PFF

Unlike most dividend funds investing in common stock, this iShares option focuses on preferred stock, which typically offers fixed dividend payments rather than annually growing distributions. Yields are attractive at 6.63%, but stock-price appreciation lags significantly. This option suits investors treating the holding primarily as an income stream.

The Broad-Market Option: VOO

While not strictly dividend-focused, Vanguard’s S&P 500 ETF delivers a 1.12% yield through its 500 holdings, many of which pay dividends. Its 14.76% 10-year return exceeds most pure dividend plays, but comes with notable concentration in technology stocks that could face sharper declines during market corrections.

Building Your Income Portfolio

The data suggests a diversified approach outperforms single-fund strategies. Investors with $2,000 or more might consider splitting allocations across multiple funds—perhaps combining SCHD for dividend reliability, VIG for growth, and VOO for broad exposure. The varying yield-to-return profiles mean no single fund serves all investors equally.

The core principle remains unchanged: dividend-paying companies—especially those with consistent track records and growth trajectories—have historically generated superior risk-adjusted returns. Whether you prioritize immediate yield, long-term appreciation, or a blend of both should determine which of these seven income funds merits your capital.