Weight Overlap
~8% shared by weight
Guardfolio Research · ETF Overlap
SCHD vs VYM: Two Dividend ETFs, Two Different Strategies
SCHD and VYM both pay dividends, but they are built on opposite selection philosophies. SCHD screens for dividend growth consistency and financial quality. VYM screens for the highest current dividend yield. Their top-10 holdings share only 4 names and 8% weight overlap — but low overlap alone doesn't mean combining them is always the right call.
Shared Top-10 Names
4 of 10 — AVGO, HD, CSCO, MRK
Strategy Difference
Quality growth (SCHD) vs high yield (VYM)
Risk Snapshot
ConcentrationLow–Moderate
OverlapLow
CorrelationModerate
DrawdownLow–Moderate
Read This As
Unlike most overlap pairs, this one is genuinely less redundant than it looks. The question is not duplication — it is whether you want both dividend strategies running at once.
Core Insight
Same label, different funds — but different doesn't automatically mean complementary
SCHD (Schwab US Dividend Equity ETF) and VYM (Vanguard High Dividend Yield ETF) are both called dividend ETFs, but their top-10 holdings barely overlap. SCHD's top holdings are Cisco, Broadcom, Chevron, Home Depot, Merck, Pepsi, Lockheed Martin, Coca-Cola, Amgen, and Texas Instruments. VYM's top holdings are JPMorgan, Broadcom, ExxonMobil, Johnson & Johnson, Procter & Gamble, Walmart, Home Depot, AbbVie, Cisco, and Merck. Only Broadcom, Home Depot, Cisco, and Merck appear in both top-10 lists. This pair is genuinely different by holdings — the key question is whether that difference is useful to your portfolio.
Strategy Difference
Why these two funds select different companies
SCHD uses a quality screen: it selects stocks that have paid dividends for at least 10 consecutive years and then filters for strong cash flow, return on equity, dividend yield, and dividend growth rate. The result is roughly 100 holdings concentrated equally in quality companies across multiple sectors — with no single name dominating (all top-10 holdings cluster around 4% weight each).
VYM uses a yield screen: it selects stocks forecast to pay above-average dividends in the coming year, weighted by market cap. The result is a broader fund (~400+ holdings) led by high-yielding large-caps — JPMorgan at 3.5% leads the fund, and financials represent 22% of assets. VYM's yield is higher today; SCHD's dividend has historically grown faster.
What the Data Shows
Where the pair differs and where it still agrees
Financials: SCHD 18% vs VYM 22%
VYM leans more heavily on banks and insurers. JPMorgan leads VYM but doesn't appear in SCHD's top holdings at all.
Energy: SCHD 13% vs VYM 10%
SCHD has higher energy exposure — Chevron is its third-largest position. VYM holds ExxonMobil but at a lower overall energy weight.
Utilities: SCHD 1.5% vs VYM 5%
VYM holds significantly more utilities — a common high-yield sector. SCHD's quality filter limits utilities exposure to under 2%.
Healthcare: SCHD 16% vs VYM 14%
Similar healthcare weights, but different names. SCHD favors Merck and Amgen; VYM holds J&J and AbbVie more prominently.
Both funds share the same 0.06% expense ratio, so cost is not a differentiator. The choice between them — or the decision to hold both — comes down entirely to strategy, not price.
Concrete Example
The right and wrong reasons to hold both
The wrong reason: "I want more dividends, so more dividend ETFs must be better." Holding both because they are both labelled dividend funds treats them as interchangeable. They are not — one is a quality growth screen and one is a yield screen. Combining them without understanding this distinction often produces a portfolio that is heavier in financials and utilities than intended, with a blended yield that is only marginally better than either fund alone.
A reasonable reason: "I want both a quality dividend growth tilt and a higher starting yield, and I accept that they will behave differently in different interest rate environments." VYM tends to behave more like a yield-sensitive instrument and can underperform SCHD when rates rise (because high-yield stocks compete with bonds for income-seeking capital). SCHD's quality filter can offer more resilience in those environments. If you understand that dynamic and want both exposures deliberately, combining them can be intentional rather than careless.
Interpretation
When this pair makes sense and when it creates unnecessary complexity
Unlike the SPY plus QQQ or VTI plus VOO combinations where the overlap is high and the duplication case is strong, SCHD plus VYM is genuinely low-overlap and the funds are selecting different companies with different objectives. That means the cannibalization concern is lower — but the complexity concern remains. Two dividend funds with different sector mixes, different yield profiles, and different growth trajectories require understanding both to manage correctly.
For most income investors who want a single core dividend holding, either SCHD or VYM alone is sufficient. Holding both makes more sense in larger portfolios where the deliberate blending of strategies is manageable, and where the investor actively monitors both for rebalancing. Adding VYM for its higher utility and financial exposure as a rate hedge layered on top of SCHD's quality core is a coherent strategy — if it is actually the intention.
Guardfolio Benchmark
How Guardfolio would frame this pair in a portfolio review
Overlap under 10%
At ~8%, these two funds are not redundant by overlap. Guardfolio would not flag this pair as accidental duplication — the question would shift to whether both strategies serve the portfolio's income goals.
Combined financials above 20%
Blending SCHD (18% financials) and VYM (22% financials) shifts the combined exposure toward the higher end. Worth checking if the broader portfolio is already heavy in banks and insurers.
Can you articulate the income goal for each?
If SCHD is for dividend growth and VYM is for current yield, that's a coherent split. If both are held because "dividends are good," the combination is probably not adding what the investor thinks.
Rate sensitivity awareness
VYM's high-yield profile makes it more sensitive to rising interest rates than SCHD. If rates are a portfolio concern, the pair may pull in different directions — which can be useful or disorienting depending on the investor's framework.
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