Love the SCHD ETF? Look at these quality dividend funds too

The Schwab US Dividend ETF (SCHD) is widely seen as the gold standard fund for dividend investors. It has a dividend yield of 3.5%, higher than other similar funds. Most importantly, it has a record of growing its returns in the last decade. Its total return also matches that of the S&P 500 index. 

In the past five years, its total return stood at 83% while the S&P 500 index rose by 85%. This is a spectacular return for an ETF that does not have a big technology element. It does not invest in popular tech names like Nvidia, Microsoft, Google, and Netflix that have done well over the years.

There are other dividend ETFs one can consider for an income-rich retirement. Some of the most notable ones are the SPDR Portfolio S&P 500 High Dividend ETF (SPDR), Vanguard High Dividend Yield Index Fund ETF (VYM), Vanguard Dividend Appreciation Index Fund (VIG), and WisdomTree US Quality Dividend Growth Fund (DGRW). 

SPDR Portfolio S&P 500 High Dividend ETF (SPDR)

The SPDR Portfolio S&P 500 High Dividend ETF is a popular fund among income investors, who have allocated over $6.7 billion in it. This is a simple fund that tracks 80 companies that make up the S&P 500 High Dividend Index.

This index tracks 80 companies in the S&P 500 index that have a high dividend yield. This yield is calculated by taking the latest dividend and dividing with the share price. Most of the companies in the fund are in the real estate industry followed by utilities, financials, consumer staples, and healthcare. 

Some of the most notable companies in the fund are Kellanova, Kenvue, Ventas, Stanley Black + Decker, Regency Centers, and Hasbro. The fund has a small expense ratio of just 0.07%, a price-to-earnings (P/E) ratio of 15, making it cheap, and a dividend yield of 4.5%.

Vanguard High Dividend Yield Index Fund ETF (VYM)

The Vanguard High Dividend Yield Index Fund (VYM) is another ETF that SCHD investors will love. It tracks the FTSE High Dividend Yield Index, which looks at companies that have a good record of paying dividends to investors. 

It is a cheap ETF with an expense ratio of 0.06%, a five-star Morningstar rating, and over $66.7 billion in assets. 

Unlike the SPDR ETF, this is a more diverse fund made up of 553 companies. Most of its companies are in the financial segment followed by industrials, consumer staples, and technology. 

The biggest names in the fund are Broadcom, JPMorgan, ExxonMobil, Procter & Gamble, and Johnson & Johnson. The VYM ETF’s total return in the last five years stood at 65% compared to SCHD’s 83%.

Vanguard Dividend Appreciation Index Fund (VIG)

The Vanguard Dividend Appreciation Index Fund (VIG) is another quality dividend ETF to consider. It is a large fund with an expense ratio of 0.06% and over $93 billion in assets under management. It has a P/E ratio of 24x and a 1.8% dividend yield.

This fund tracks the S&P US Dividend Growers Index, which focuses on companies with a good track record of growing their payouts to investors. It has 339 companies in all industries. Most of them are in industries like information technology,  financials, healthcare, and consumer staples. 

The VIG ETF’s top constituent companies are the likes of Apple, Microsoft, Broadcom, JPMorgan, and Exxon. While this fund does not have a high dividend yield, it has a good record of doing well because of its technology element. Its total return in the last five years stood at 76%.

WisdomTree US Quality Dividend Growth Fund (DGRW)

The WisdomTree US Quality Dividend Growth Fund (DGRW) is another fund that the SCHD ETF investors might love. It is a fund that screens companies for their quality and dividend growth.

It is a large fund with over $13.4 billion in assets under management and an expense ratio of 0.18%. In terms of valuation, the fund has an estimated price-to-earnings ratio of 19.5, lower than the S&P 500 index average of 19.5, and a price-to-book ratio of 6.4. 

The IT sector is the biggest element of the DGRW ETF, with companies in the industry accounting for 28%. It is followed by companies in industries like health care, industrials, financials, and consumer staples. 

The most notable names in the ETF are Microsoft, Apple, AbbVie, Broadcom, Nvidia, and Procter & Gamble. As a result, the fund’s performance has been stellar, as it rose by 100% in the past five years. 

Investing in SCHD and other ETFs is a good way for you to grow your returns. However, I believe that these funds should be used to complement other generic funds like the S&P 500, Nasdaq 100, and Dow Jones.

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