SCHD Is Crushing the Vanguard High Dividend Yield ETF (VYM) This Year. I Predict That Advantage Is About to Fade.
Investing in high-yield dividend stocks offers a one-two punch of market participation and passive income. But if a company cuts its payout, then the passive income stream can decrease. Exchange-traded funds (ETFs) with high-yield dividend stocks can be an effective way to collect passive income across a basket of stocks, thereby reducing the risk of a single company or a few companies slashing their payouts. The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is up 21.7% year-to-date (YTD) at the time of this writing, crushing the 10.9% gain in the Vanguard High Dividend Yield ETF (NYSEMKT: VYM) . That's a big difference for two ETFs that sound similar on paper. What's more, the Schwab ETF yields 3.2% compared to 2.4% for the Vanguard ETF. Continue reading