Which Dividend ETF Suits Your Income Strategy: SCHD or JEPI?

For US equity investors hunting steady income streams without excessive risk, two Exchange-Traded Funds stand out: Schwab U.S. Dividend Equity ETF (SCHD) and JPMorgan Equity Premium Income ETF (JEPI). Each takes a distinct approach to generating returns, and understanding their mechanics can help determine which aligns with your portfolio goals.

The Conservative Choice: Schwab U.S. Dividend Equity ETF (SCHD)

Since its 2011 launch, SCHD has become a cornerstone for dividend-seeking investors. The fund tracks the Dow Jones U.S. Dividend 100 Index, curating stocks that demonstrate financial strength relative to peers through rigorous quantitative screening.

What makes SCHD particularly attractive is its cost structure. With an expense ratio of just 0.06%—among the most competitive in the dividend ETF space—investors keep more of their gains. The fund currently generates a 3.64% yield while managing $48.52 billion in assets. According to analyst consensus weighted by TipRanks methodology, SCHD earns a Moderate Buy rating, with Wall Street pricing targets suggesting roughly 10.14% upside potential to $79.71.

The Income Generator: JPMorgan Equity Premium Income ETF (JEPI)

JEPI adopts a more sophisticated income generation strategy. The fund holds large-cap US stocks while simultaneously selling options contracts—a technique that amplifies monthly payouts at the cost of capped upside. This approach appeals to investors prioritizing immediate cash flow over aggressive capital appreciation.

The result? JEPI delivers an eye-catching 9.13% yield, substantially higher than traditional dividend vehicles. Managing $30.33 billion in AUM with a 0.35% expense ratio, JEPI also carries a Moderate Buy consensus rating from analysts, with average price targets implying 8.7% upside to $59.26. The trade-off: the options strategy introduces complexity and reduces volatility but similarly restrains explosive gains.

Making Your Choice

The comparison ultimately hinges on priorities. SCHD offers a straightforward, low-cost path to dividends through quality stock selection—ideal for long-term wealth building. JEPI prioritizes maximum current income through an active options overlay, suiting investors who want monthly distributions and can accept muted appreciation.

Both deliver portfolio diversification within US equities while maintaining minimal expense burdens. Your selection depends on whether you value simplicity and potential growth (SCHD) or elevated yield generation (JEPI).