SCHD Vs DGRO: ETF Face-Off For High ReturnsLAST UPDATED: July 26, 2023 | By Conrad Golly
The world of ETFs has become increasingly popular among investors seeking high returns. Among the top contenders in the Large Value fund category are SCHD and DGRO. While both ETFs have similarities in terms of category and top holdings, there are key differences that investors should consider before making a decision.
In this article, we will conduct a face-off between SCHD vs DGRO to determine which ETF offers the best potential for high returns. To begin, we will compare the performance differences between SCHD and DGRO. This will include an analysis of their expense ratios, sector exposure, and historical performance.
We will also examine the investment platforms available for both ETFs, as this can play a crucial role in an investor’s decision-making process. By the end of this article, readers will have a better understanding of the strengths and weaknesses of each ETF, allowing them to make an informed decision based on their individual investment goals.
Key Takeaways SCHD Vs DGRO
- SCHD has a lower expense ratio and higher exposure to financial services sector compared to DGRO.
- SCHD has provided higher returns than DGRO over the past 6 years and has a slightly higher dividend yield.
- SCHD has more exposure to Financial Services, Industrials, and less exposure to Technology compared to DGRO.
- Despite having a slightly lower final balance on a $10,000 investment, SCHD’s CAGR is 2.34 percentage points higher than that of DGRO.
ETF Comparison SCHD Vs DGRO
When comparing SCHD and DGRO ETFs, it can be observed that SCHD has a lower expense ratio and higher exposure to financial services sector compared to DGRO. This has resulted in higher returns and dividend yield for SCHD over the past 6 years.
Additionally, SCHD has yielded on average 2.34% more per year over the past decade compared to DGRO, making it a more attractive option for investors looking for high returns.
Moreover, SCHD has more exposure to Financial Services and Industrials, and less exposure to Technology compared to DGRO. This may indicate that SCHD is better suited for investors who prefer a more conservative investment approach, as it has a slightly lower standard deviation and its Sharpe Ratio is 0.
However, DGRO has a higher standard deviation which may be attractive for investors who are willing to take on more risk in exchange for potentially higher returns.
Performance Differences SCHD Vs DGRO
The performance differences between the SCHD and DGRO ETFs are noteworthy, as each fund possesses unique characteristics that impact their overall returns. SCHD has a higher dividend yield and a larger exposure to the financial services sector, while DGRO has a higher exposure to technology and larger top holdings.
These differences in sector allocation and top holdings can have a significant impact on overall returns and highlight the importance of fundamental analysis and risk assessment when selecting ETFs.
To further compare the performance differences between SCHD and DGRO, the table below provides a summary of key metrics over the past 6 years. As shown, SCHD has provided higher returns and a lower standard deviation than DGRO, indicating better risk-adjusted returns.
However, DGRO has a higher Treynor Ratio, which measures returns relative to systematic risk, and a higher Sharpe Ratio, which measures risk-adjusted returns relative to volatility. These differences illustrate the importance of considering multiple metrics when evaluating ETF performance.
Overview of ETFs and their benefits in portfolio diversification
You can diversify your investment portfolio by including ETFs, which provide a range of benefits such as lower costs and access to a variety of assets. ETFs are exchange-traded funds that work like mutual funds but trade like stocks.
They offer investors a way to invest in a diversified portfolio of stocks, bonds, or other assets with a single investment.
ETFs are a great way to diversify your portfolio because they allow you to invest in a broad range of assets with a single investment. ETF selection criteria should be based on factors such as the fund’s performance history, expense ratio, and liquidity.
Additionally, risk management strategies should be considered when selecting ETFs, as some funds may be more volatile than others.
SCHD: Schwab US Dividend Equity ETF
If you’re looking for a reliable way to invest in US equity dividends, Schwab US Dividend Equity ETF is a strong contender. This ETF tracks the Dow Jones US Dividend 100 Index, which includes high dividend yielding US companies with a consistent track record of paying dividends.
This makes it an excellent choice for investors seeking stable income over the long term.
When compared to iShares’ similar ETF, SCHD has a slightly lower expense ratio and a lower turnover rate, which means lower trading costs and potentially less capital gains taxes.
Additionally, SCHD’s portfolio is more heavily weighted towards consumer goods and healthcare companies, which tend to be less cyclical and more defensive compared to sectors such as energy and materials.
Overall, if you’re looking for a reliable dividend investing strategy, SCHD could be a great addition to your portfolio.
DGRO: iShares Core Dividend Growth ETF
Investors seeking long-term growth potential and a focus on companies with a history of increasing dividends may find the iShares Core Dividend Growth ETF to be a compelling choice.
DGRO is designed to track the performance of companies that have a strong track record of increasing dividends over time. This focus on dividend growth potential can be particularly appealing to investors looking to generate income and build wealth over the long term.
When it comes to DGRO performance, investors are likely to be pleased with the results. Over the past five years, DGRO has outperformed the S&P 500 index, delivering strong returns for investors.
This performance can be attributed to the fund’s holdings of high-quality companies with strong fundamentals and a focus on consistent dividend growth.
With low fees and an emphasis on companies with strong financials, DGRO is a solid choice for investors looking to build a diversified portfolio with a focus on long-term growth potential.
Key Differences between SCHD and DGRO
Looking at the two dividend-focused ETFs, one stands out for its emphasis on consistent dividend growth over time, while the other prioritizes high dividend yields and low volatility.
DGRO, the iShares Core Dividend Growth ETF, is focused on companies that have a track record of increasing their dividends year after year. It aims to provide investors with exposure to companies that have the potential for long-term growth and sustainable dividends.
This ETF is designed to track the performance of the Morningstar US Dividend Growth Index, which includes companies that have a history of increasing their dividends for at least 5 consecutive years.
On the other hand, SCHD, the Schwab US Dividend Equity ETF, emphasizes high dividend yields and low volatility. It tracks the performance of the Dow Jones US Dividend 100 Index, which includes companies that have a high dividend yield and a consistent history of paying dividends.
While both ETFs have a similar objective of providing investors with exposure to dividend-paying companies, they differ in their sector allocation. SCHD has a higher allocation to defensive sectors such as consumer staples and healthcare, while DGRO has a higher allocation to growth sectors such as technology and consumer discretionary.
Choosing the Right ETF for Your Investment Goals
When it comes to achieving your investment goals, finding the right ETF can make all the difference. To choose between SCHD and DGRO, you need to consider your risk tolerance and the market performance.
The SCHD ETF is designed for investors who are seeking stable dividend income and are willing to take on a moderate level of risk. This ETF invests in large-cap companies that have a history of paying consistent dividends, which can provide a reliable source of income for investors.
On the other hand, the DGRO ETF is for investors who are looking for a more growth-oriented strategy. This ETF invests in companies that have a history of growing their dividends over time and have a strong track record of performance.
While this ETF may be riskier than SCHD, it can provide higher returns for investors who are willing to take on more risk.
Alternative Investment Platforms
Investment platforms offer a variety of options for investors to diversify their portfolios and manage their investments.
Groundfloor offers short-term, high-yield bonds that allow investors to diversify their portfolios in the real estate sector. The platform is ideal for those looking for short-term investments, as the bonds mature within six to twelve months.
Groundfloor also offers a secondary market where investors can buy and sell shares, providing liquidity to the investors.
The Bottom Line:
Congratulations! You now have a better understanding of the SCHD and DGRO ETFs and how they can benefit your portfolio diversification.
Both ETFs offer exposure to dividend-paying stocks, but there are key differences to consider when choosing the right one for your investment goals.
SCHD focuses on high-quality, large-cap dividend stocks with a track record of consistent payouts, while DGRO targets companies with the potential for future dividend growth.
Before you go…
Frequently Asked Questions
How Do SCHD And DGRO Compare To Other Dividend-Focused ETFs On The Market?
If you’re interested in dividend-focused ETFs, you’ll want to compare dividend yield and sector diversification. Researching these factors will help you determine how SCHD and DGRO stack up against other options on the market.
What Is The Historical Performance Of SCHD And DGRO Compared To The Overall Market?
If you’re interested in historical performance comparison and market correlation, you’ll want to take a look at how SCHD and DGRO have performed compared to the overall market.
Are There Any Tax Implications Or Considerations When Investing In SCHD Or DGRO?
When investing in ETFs like SCHD or DGRO, it’s important to consider tax implications. Dividend taxation can affect your overall returns, so be sure to research and understand the tax consequences before investing.
What Is The Expense Ratio For Each ETF And How Does It Impact Returns?
When investing in ETFs, the expense ratio can have a big impact on your returns. Be sure to consider this when choosing between funds. Additionally, don’t overlook the diversification benefits of ETFs.
How Do SCHD And DGRO Choose Their Underlying Dividend-Paying Stocks And What Criteria Do They Use?
To choose their underlying dividend-paying stocks, both SCHD and DGRO use a stock selection process that includes criteria such as dividend yield, financial health, and sustainability of payouts.
These factors help ensure a consistent stream of income for investors.
What Are The Management Fees For SCHD And DGRO?
Comparing expense ratios: SCHD vs DGRO, the impact of fees on returns is significant. SCHD has a lower expense ratio than DGRO, which can lead to higher long-term investment performance.
Analyzing the effect of management fees on SCHD and DGRO’s returns is crucial for investors.
How Do SCHD And DGRO Differ In Terms Of Portfolio Diversification?
In terms of portfolio composition, SCHD has more exposure to financial services and industrials sectors, while DGRO has a higher exposure to technology. SCHD has a lower standard deviation and higher dividend yield, indicating lower risk exposure.
What Are The Historical Dividend Payouts For SCHD And DGRO?
Both SCHD and DGRO have a strong history of dividend growth, with SCHD offering a higher dividend yield. Payout frequency for both ETFs is quarterly.
What Is The Minimum Investment Required To Buy Shares Of SCHD And DGRO?
The minimum investment required to buy shares of SCHD and DGRO varies depending on the brokerage firm. Brokerage fees also vary and should be considered when investing in these ETFs.
How Do SCHD And DGRO Compare To Other Top-Performing ETFs In The Large Value Fund Category?
Performance comparison and market trends analysis show that SCHD and DGRO belong to the top-performing ETFs in the large value fund category.
SCHD has higher returns, lower expense ratio, and higher exposure to financial services, while DGRO has higher exposure to technology.