SCHD vs HDV: Which High Dividend ETF Delivers Superior Income Returns for 2025?

Performance Gap: The 10-Year Story

When comparing dividend-focused exchange-traded funds, the numbers tell a compelling story. The Schwab U.S. Dividend Equity ETF (SCHD) achieved a 199.5% total return over the past decade, substantially outpacing the iShares Core High Dividend ETF (HDV) at 143.1%. This 56-percentage-point performance gap raises critical questions about investment strategy and index construction for those seeking reliable dividend income.

The divergence stems from fundamentally different methodologies. SCHD tracks the Dow Jones U.S. Dividend 100 Index, emphasizing dividend growth and sustainability, while HDV follows the Morningstar Dividend Yield Focus Index, prioritizing current yield levels. This philosophical difference dramatically impacts long-term wealth accumulation.

Cost Structure and Yield Comparison

The Schwab U.S. Dividend Equity ETF operates with a 0.06% expense ratio, compared to HDV’s 0.08%, offering a modest but meaningful cost advantage. More significantly, SCHD delivers a 3.8% dividend yield versus HDV’s 3.1%, making it more attractive for income-seeking investors who want to maximize cash distributions while minimizing fees.

SCHD’s asset base of $70.1 billion dwarfs HDV’s $11.6 billion, reflecting investor preference for the lower-cost, higher-yielding option in the high dividend ETF category. This size advantage typically translates to tighter bid-ask spreads and better liquidity for traders.

Recent Performance Divergence

However, the recent 12-month period reveals a different narrative. HDV posted a 3.6% return through mid-November 2025, while SCHD recorded a negative 5.7% return, suggesting headwinds in the growth-oriented dividend strategy. Over five years, a $1,000 investment in HDV grew to $1,400 compared to $1,300 with SCHD, indicating that while SCHD dominates over decades, HDV occasionally edges ahead during specific market conditions.

Portfolio Construction and Sector Exposure

SCHD holds 103 dividend-paying stocks with substantial weightings in energy (20%), consumer defensive (18%), and healthcare (16%). Its top three positions—Amgen, AbbVie, and Cisco Systems—reflect a blend of growth and income characteristics.

HDV employs a more selective approach with 75 holdings, showing heavier exposure to consumer defensive (25%), energy (22%), and healthcare (20%). Its largest positions—Exxon Mobil, Johnson & Johnson, and Chevron—skew toward mega-cap, established dividend payers.

Both funds maintain straightforward structures without leverage or currency hedging complications. The difference lies in breadth: SCHD’s larger portfolio provides more diversification, while HDV’s concentrated approach may appeal to those favoring household names and proven dividend histories.

The Dividend Growth Advantage

The most critical distinction emerges in dividend sustainability metrics. SCHD’s dividend payouts increased 29.9% over the past five years, reflecting exposure to companies still expanding their distributions. HDV’s payout growth lagged significantly, with its latest quarterly distribution only 2.85% higher than five years prior, disappointing income investors expecting meaningful payout progression.

This gap reveals why long-term investors should consider the strategic intent behind ETF construction. A high dividend ETF focusing on current yield may capture established payers but miss the secular growth story of maturing dividend growers.

Investment Decision Framework

For investors prioritizing immediate income and seeking established dividend payers during uncertain markets, HDV presents a defensible choice. Its larger allocation to defensive sectors and proven blue-chip holdings may provide psychological comfort during volatility.

Conversely, those with longer time horizons and capacity to weather short-term drawdowns should favor SCHD. The combination of lower fees, superior long-term returns, accelerating dividend growth, and larger asset base creates a compelling advantage for wealth accumulation over 10+ year periods.

Neither ETF employs exotic strategies—both are straightforward vehicles for equity income exposure. The decision hinges on whether maximizing current yield or optimizing long-term total returns aligns better with your financial objectives. SCHD’s decade-long outperformance and enhanced dividend trajectory make it the stronger choice for most growth-minded income investors, while HDV serves those valuing stability and immediate payouts over expansion.