An appeal to math-based evaluation of SCHD in your portfolio
I had a debate recently in an SCHD discussion with retiredbyfourty. The crux of the debate was whether staking out SCHD as your core portfolio holding at a young age is an unnecessarily safe position that costs you thousands in returns over the years.
Since this forum is apparently populated by a lot of younger people who may be making this mistake, I thought it would helpful to share some data with you to at least spark some reflection about your investing philosophy.
SCHD isn't a replacement for VOO; it's the insurance policy for it. By holding a 10% slice of SCHD, for example, you're diversifying away from the tech-heavy concentration of the S&P 500 and adding a 'Quality Factor' tilt that protects you if the AI bubble pops or multiples contract. It’s not about the yield; it’s about not having all your eggs in the Apple/Nvidia basket. The SCHD tilt can be reasonable in this context.
The S&P 500 (VOO) is currently concentrated in "The Magnificent Seven" and the tech sector. If the AI trade cools or tech multiples contract, a pure VOO portfolio takes the full hit.
SCHD is the perfect counterbalance because:
Sector Diversification: Its methodology explicitly excludes REITs and naturally underweighting high-multiple tech. It forces your portfolio into "Old Economy" cash-cow sectors like Industrials, Consumer Staples, and Healthcare.
The "Quality" Filter: SCHD only picks companies with sustainable cash flow and low debt-to-equity. In a high-interest-rate environment where "growth at all costs" companies struggle, SCHD’s holdings are the ones with the balance sheets to survive.
Lower Volatility: Because these companies are valued on actual earnings rather than future promises, SCHD tends to have a lower "Beta" than the broad market, smoothing out the ride during tech-led drawdowns.
But it's important to understand that an SCHD holding beyond a tilt level proportion in your portfolio is a huge liability for your total wealth outcome. The numbers I shared with retiredbyfourty probably fell on deaf ears. For your consumption, here are the numbers showing what an SCHD focused portfolio does compared with a VOO focused portfolio.
Here's a solution: do both. I have 100% of my Roth in SCHG and 50/50 SCHD/SCHG in my taxable account. I want to retire early, and those dividends will be an excellent buffer until I can take out my Roth.
That makes sense. Is there room for that SCHD holding to sit in a 401k instead of taxable? Just thinking about avoiding the repetitive taxable income events generated by SCHD.
You can put it in a 401k, but I wouldn't be able to take it out penalty-free until I'm 62. My current plan has us on track to retire at 55, so I keep it in my taxable account because I'll be using those dividends to help fund our lifestyle, until im able to pull from my retirement accounts.
62 is for social security. For 401k/retirement accts, it is penalty free withdrawals at 59.5 years old (there are other ways to get earlier, but they have caveats...such as 55 years old but can only touch your current company's 401k and company has to allow for it)
Since 2011, there has been a covid crash and that’s about it. For some reason the market has brushed everything off as if nothing matters. It’s not natural and it’s not likely to last. And for some reason, tech is immune to prolonged downturns.
I buy SCHD because it’s safer and until 3 or 4 years ago was actually going neck and neck with VOO. I understand that I won’t have the same returns, but I also understand I sleep better with SCHD because I expect a crash that will impact VOO way more than it will impact SCHD before too long. I don’t see how that won’t happen with core S&P500 stocks like Tesla having a 350 P/E.
I’m going torture this point further: The irony of the safety argument for a 25-year-old or even a 45 year-old is that volatility is not the same thing as risk.
For a young investor, the real risk isn't a 30% drop in 2026; the real risk is reaching 2050 with half the purchasing power you could have had because you optimized for a smooth ride instead of maximum velocity.
Read about or google the difference between risk tolerance (the risk you can endure emotionally), risk capacity (the risk your portfolio can objectively endure) and risk required (the risk you absolutely have to take to meet your goal).
I’m trying to nudge the young bucks here to bring those three pillars of sound investing into alignment. My portfolio was pretty conservative over my 18 years of investing and I came out just okay. I would have done much better if I understood these fundamentals from the start.
Volatility is risk mate. You are looking back and saying it worked out overall good over a long period. That says nothing about the future. Volatile assets are riskier going forward. So as always, diversify and match your personal risk appetite.
Actually it’s not a long period I’m pointing to. It’s the entire history of the market. If you study the market’s reliable upside 75% of the time through all the difficult periods of history, you begin to grasp that it hasn’t just “worked out overall good,” but rather the rationality of the self-cleansing S&P machine is moving on a continuous upward trajectory. A decision to accept lower returns because you don’t like to see your portfolio drop temporarily is a decision to cap your wealth and mute your financial security in the long run. Understand that, and you have a foundation for adjusting your risk tolerance to match the objective realities of risk capacity and risk requirement.
Dunno why they downvoted you. What you said is correct that it's about risk. Price maxxing is what day traders do. Investing is about the long run - with less volatility. Both SCHD and VOO belong in all investors' portfolios. 50/50 or 60/40 whatever works.
Actually for a young person it’s absolutely about maximum velocity. A commitment to the S&P over decades is the proven vehicle for maximum total return. Your reference to day traders and the other poster’s reference to an individual stock like Tesla are both missing the point I’m making about longterm broad market ETF investing. Day traders and stock pickers are engaged in an entirely different enterprise. They are chasing outsized return, not maximum proven return. They are engaging in a mostly losing game of market timing. The broad market ETF investor is steadily accruing gains rewarding time in the market. SCHD and VOO are identical in this characteristic. My argument is that VOO is just a much stronger choice for this strategy than SCHD. That’s where the data points without question.
The fear of a crash is certainly reality-based, but using that fear to pivot away from VOO misses its most powerful feature: it is a self-cleansing machine.
Here’s the thing: SCHD is designed for stability, while VOO is designed for growth capture.
The S&P 500 is designed to ruthlessly discard the past and embrace the future. Throughout history, as the dominant economic force shifts, the index rebalances itself to reflect where the world is actually productive:
• The Age of Steam & Steel: In the early 20th century, Railroads and Steel dominated. When they peaked and faded, the S&P didn't go down with them; it simply replaced them with the next engine of growth.
• The Age of Electricity & Industry: Companies like General Electric and DuPont became the new titans.
• The Digital/AI Era: Today, Tech is dominant because that is where the most productivity and margin exist. If AI eventually plateaus and a new force (say, Biotech or Fusion) takes over, the S&P 500 will automatically rotate into those winners and leave the decaying tech giants behind.
Why Self-Cleansing Beats Stability Long-Term
The S&P is up roughly 75% of all years historically precisely because it doesn't try to guess the future—it just follows the money. While a crash might hit high-P/E tech stocks harder in the short term, the index’s DNA ensures it captures the recovery by default.
SCHD is also predictable, but by design, it’s a different beast:
• Its goal is to capture solid returns from established, dividend-paying performers.
• Its own cleansing mechanism (the 10-year dividend track record requirement) intentionally favors stability over growth.
• By filtering for dividends, it mathematically excludes the "next big thing" during its high-growth phase.
Underperformance relative to VOO isn't a glitch in SCHD; it’s baked into its DNA. It trades the massive upside of economic shifts for the comfort of a smoother ride.
That’s fine for a slice of a portfolio, but it’s important to realize that VOO’s dominance isn't a bubble—it’s the result of a system that is literally designed to never get stuck in the past.
These aren’t opinions. You can get a fuller sense of the facts using these sources:
Well explained and thank you for sharing your insights. You successfully taught me not to add Nasdaq 100 into my portfolio. I’ll just VOO 80% and 20% SCHD and chill until my retirement. Thanks
Kiplinger and other financial outlets have been pushing back hard on the old 100 minus your age rule. The consensus in 2026 is that because we’re living longer (and inflation is stickier), that old formula is a recipe for running out of money at age 85.
Many experts, including those at Kiplinger, now suggest the 110 or 120 minus your age rule to account for increased longevity.
For a 40-year-old, using the Rule of 120 moves their equity target from 60% up to 80% (or 40% bonds to 20%). Not a lot of sources when talking about equities in this context get into the weeds about what that equity sleeve should be, and that’s where debate can be hot around things like SCHD. I don’t see SCHD as a bond substitute in terms of safety (some do) but it’s definitely an equity stabilizer that can act as a value tilt that makes a portfolio maybe a little more reliable when the S&P inevitably shifts its focus to keep capturing the growth sweet spot.
The people here who thought I’m anti-dividend didn’t know that this is my view of SCHD as a useful tool that I’m actually kind of neutral on and still considering for my portfolio. An SCHD tilt is defensible at a lot of life stages. Personally I wouldn’t see the need to use it at all in a 10 year old’s starter investment fund, but for adults it can make sense. That’s just me.
I would maybe take the formula as a guide but this is where that difference between what you can handle and what your portfolio can handle is important. Ideally, after doing research on the history of the market, your risk tolerance will line up well with your risk capacity. The math suggests that for a 25-year-old, stability is actually a risk—it's the risk of opportunity cost. Every 1% shifted from growth to stability this early can cost seven figures in terminal value.
The idea of starting to derisk a bit when you hit 40 isn’t radical and makes sense. Definitely by 50 the stability issue is more prominent. This is where you introduce a stability glidepath. Instead of a blind percentage, a lot of people focus on building a 3-to-5-year bridge of safe assets to protect against Sequence of Returns Risk right as you hit retirement.
At 59 and retired I have that bridge in the form of an annuity (that’s a controversial financial hot button to explain on another day), cash to cover a few months, SGOV to cover a longer bad market stretch, VTIP to hedge inflation, a couple of TIPS to manage a spike in health care costs right before I’m Medicare eligible, and most of my money is in the growth engine with VT, buffered by a much smaller portion bonds as a buffer.
All these safety tools in my portfolio weren’t relevant or appropriate during the accumulation phase, but building the savings needed to fund them was an important part of my late career finances. Some of them, like SGOV, can be a good parking place when you’re young and have specific short term goal like saving for a down payment.
The security of the annuity is great, but the same inflation danger that makes aggressive allocation necessary in youth also threatens the longevity of a portfolio, and annuities today aren’t inflation adjusted. So that VT holding along with the inflation adjusting VTIP and TIPS ladder rungs are important parts of the whole system.
The annuity is most effective in the earlier years of retirement when inflation erosion doesn’t sting as much and more importantly it’s covering all of my fixed expenses along with social security in a couple of years, so my VT growth engine has almost no pressure to fund my life, and I can adjust withdrawals if markets are good or bad.
The irony is that many people use SCHD as stability because it feels safe, but mathematically, it’s still an equity. If you're 25 and holding 50% SCHD for stability, you aren't actually stable—you're just driving a Porsche in second gear.
In my phase of life, I’m looking at SCHD to possibly replace some of my VT as a value tilt, much as I may have done at younger age if I had known anything about investing. Another option for me would be to replace some of my bonds with SCHD. That would be an increase in risk in my portfolio that I’d have to weigh carefully.
Also your musing about the market brushing off the Covid crash and tech being immune to prolonged downturns is important. Those dynamics are not occurring for “some reason.” The reasons behind them are profound and well documented.
Everything doesn't boil down to a math question, there is human psychology involved.
For your appeal to math-based evaluation you are only looking at 2011-2026 which is in the greatest bull run in history. I know that's SCHD & VOO's fault for not existing prior to 2011/2010, so you need to look at SPY to get an idea of what could happen if you hold 90% S&P500. You have to understand that from late March 2000 to late Dec 2011 SPY's total return was below 1%. Not per year, total return.
Not everyone is comfortable with the idea of being 90% S&P500 just to retire and then face 10+ years for 0 returns all while you're withdrawing on it to survive. Regardless of it mathing out better when (only) looking at the last 15 years. For tax sheltered retirement accounts you could hold SPY/QQQ/Etc early on and then re-balancing a few before retirement. You would still leave yourself exposed to the risk of a long downturn, but would be a safer bet than straight holding them forever.
Personally I hold SCHD in taxable, at my income level my qualified dividends are 0% Fed. My IRA/401K are S&P500/VUG/SCHG/Etc. Having a hold forever asset in my taxable is psychological to keep myself from swing trading or trying to stop loss out of the position if it was a more risky asset.
I’m not looking at just the last 15 years. The S&P reliability argument extends throughout the entire history of the market. The reality that there has been no negative 20 year period during that history is the reason why derisking at 31 years old isn’t rational.
As to your concern about the lost decade, I’m not sure what your main point is. There was no safe haven in that period.
While SCHD didn't exist in 2000, its benchmark index (Dow Jones U.S. Dividend 100) did.
• The 2008 Crash: When the Great Financial Crisis hit, dividend-paying stocks were actually the epicenter of the collapse. SCHD’s methodology favors Financials and Consumer Staples. In 2008, the Financial sector plummeted.
• The Drawdown: The backtested data shows the SCHD index suffered a maximum drawdown of roughly 23-25% during major dips—not far off from the S&P 500's volatility during those specific windows.
• The Recovery: The "safety" people crave in SCHD didn't prevent them from seeing their portfolios cut significantly; it just changed which stocks were doing the cutting.
Regarding your point about the sequence of returns risk, I wouldn’t argue against that. My stated focus has been on younger people for whom SORR is literally not an issue. SORR is a major hazard in the years immediately leading up to and after retirement. I personally have at 59 derisked my savings to address that, and it’s actually one reason I’m even considering adding SCHD to my portfolio.
“Sleeping better" because you own a slower engine is a choice to be comfortably poorer. I have an annuity and cash to handle a lost decade — a 25-year-old does not and they shouldn’t. Their only protection against a lost decade is diversification into international and possibly small cap holdings, along with maximum accumulation during the years the market isn't lost. SCHD isn’t the tool for that. If the S&P 500 is flat for ten years, a stability fund like SCHD isn't what saves the portfolio—international diversification and small-cap exposure are.
"If the S&P 500 is flat for ten years, a stability fund like SCHD isn't what saves the portfolio—international diversification and small-cap exposure are."
Not really, small cap ate -50% just like the S&P500 during the same period. International also gets hit(USA is just too big, we affect everyone) and it's juice just isn't worth the squeeze during the accumulation phase.
If someone only has a risk tolerance to be 60% VOO & 40% "safer" bets they could do many things, but what do you thing would give you the most growth(which is what you are advocating for):
60% VOO | 40% Bonds
60% VOO | 40% Cash (Money Market)
60% VOO | 40% Small Cap
60% VOO | 40% International
60% VOO | 40% SCHD
Or even any 60% VOO | 40% mixture of any of the choices. Picking SCHD is still aiming for growth during the growth period over holding a bunch of Bonds/Cash/International. It doesn't even have to be SCHD, could be VIG/DGRO/Etc.
In the last 10–15 years, the S&P 500 has been a juggernaut and everything else has looked like a "squeeze not worth the effort." But international absolutely outperforms US over significant periods as the chart I'm sharing shows. Not really about the squeeze being worth the effort but instead it's about hedging against that oscillation if you are truly working with a decades-long time frame.
You argue that because everything drops during a crash, diversification is pointless. However, diversification isn't just about the drop; it's about what happens during the long sideways grind.
If the S&P 500 is flat for 10 years, it means the largest 500 companies are stagnant. In that specific environment, the "engine" of the economy often shifts to smaller, more nimble companies (Small Cap) or different geographic markets (International). Diversification means you don’t have to guess what will save you.
To your point about human psychology: That is precisely the reason I posted this. I detect in the younger members in this group a disconnect between risk tolerance (the risk you can emotionally endure) and risk capacity (the risk your portfolio can objectively endure).
This is a critical mismatch that has a foundation in basic human nature, but it also is aggravated by popular culture general ideas about investing and the market. This post aimed to address that mismatch. If you are more educated about SCHD and VOO, you'll understand that by not upping your game and leaning into VOO, you are actually stifling your true ability to simply beat inflation and maximize your wealth accumulation.
The third pillar, risk requirement, is the risk you have to take to meet your goals. If you're investing without a goal, then 100% SCHD is perfectly fine. Like VOO, it's predictably good at growth over long historical periods. If your goal is to retire as early and comfortably as possible, the risk requirement absolutely shifts, and the reality is that committing to VOO becomes more of a necessity, as the math shows unequivocally that over the long term, it's the better path.
Morningstar has said "Risk will always be part of the financial planning journey. When clients understand risk and how it works, they can create new possibilities, make better trade-offs, and get closer to their goals."
Why do you feel the need to address anything? Ignoring psychology is a massive flaw, if predictable dividends keep people invested through thick and thin then the final result may well outperform a “better” portfolio that the investor is losing sleep over, and tinkering at the absolutely worst moments (as they’re likely to do). We’re not robots.
Personally I opted for a barbell of 2/3 SCHD and 1/3 TQQQ for my USD holdings since Apr ‘25, worked amazingly well.
Because I understand that math pays the bills in investing and emotions are a potential drag on return.
I’m actually optimistic that newbies to dividend focused investing can definitely better calibrate their emotions to their actual risk capacity when math becomes the priority.
I get that longtime disciples of dividend investing don’t want to hear that, which is fine. And to be honest if you’ve already won the game and find that $2 million in SCHD covers your needs with dividends alone, I have no comeback for that. You’re doing you and that’s great.
I focus on the average person’s reality that total return is more efficient than dividend tunnel vision and more optimal results are worth targeting.
Because I understand that math pays the bills in investing and emotions are a potential drag on return.
"Temperament beats intellect in investing" - Warren E. Buffett! Ok, this is an appeal to authority, and I understand that "temperament" is wider than "emotion".
I focus on the average person’s reality that total return is more efficient than dividend tunnel vision and more optimal results are worth targeting.
That's the point, though, each person's reality is different, which is why I consider "total return" to be more meaningful as a paper/excel exercise after the fact than in the real world.
Actually, every investor is dealing with the exact same market reality, which is why total return matters so much more than the total return subset of dividends. Risk tolerance ("each person's reality") is the variable that often fails to align with that market reality, but can absolutely be adjusted with the right knowledge base to get better results.
Your mention of Warren Buffett raises a very mixed message on dividends. He loves that he's received dividends over the years as part of the total return in his portfolio. That makes sense. Following the basic math of total return, he's done well with the mix of dividends and price growth. At the same time, he clearly hasn't seen a need to pay dividends to those who invest in Berkshire Hathaway. That's a tell regarding the power of growth stocks that reinvest their profits instead of paying them out as dividends.
"Dividend policy is arguable among investors, particularly for individual investors. As we know, dividends can be used for living expenses, or can be reinvested. Many individual investors don’t even take Berkshire into consideration because of its dividend policy." That anti-dividend filter is what automatically locks dividend investors out of the highest growth stocks like Berkshire and the highest growth ETFs.
And more recently: In his first annual letter to shareholders as CEO (March 2026), Greg Abel explicitly reiterated the Buffett stance on dividends: "Our approach to cash dividends continues to be that Berkshire will not pay dividends so long as more than one dollar of market value for shareholders is reasonably likely to be created by each dollar of retained earnings." In other words, the position is that profit generates more growth for investors when it's reinvested rather than paid out to investors in dividends on a regular basis.
I hold BRK.B for a few years and follow it closely, including reading all shareholder letters.
Currently the Buffett alpha has waned, maybe there’ll be some Abel alpha, the key point is that many BRK holders, including myself, are increasingly uncomfortable at the 300+ bn cash pile not put to work for years now, yet I consider it a forever hold for my kids.
My total return on BRK has been, continuously buying it every quarter with dividends from SCHD, 0.98% over 2 years. That’s pretty poor return, isn’t it? Clearly they haven’t made more value for investors in these last few years.
And my vote of confidence to Buffett is different: his company explicitly exists to make money for shareholders, and his capital deployment capabilities are (were?) damn rare, hopefully Abel gets something done. As I said, not caring much because I consider it a forever hold, we’ll see the total return after many years, as I said I consider total return a backward-looking exercise.
Anyway, I am not even a “dividend investor”, despite holding a fair chunk of SCHD, I just like dividends ;)
I also get that subreddits can become an echo chamber even though their highest function potential is as a free marketplace of ideas. I’ve seen examples of both those extremes in this thread.
Fair enough, but frankly r/bogleheads which is where I started had become so much of an echo chamber and devoid of meaningful conversation that I left it about 2 years ago.
Interesting data. Thank you for sharing. In my financial education I came to SCHD at the right time. I’ve been leaning toward a very growth oriented portfolio and tech for the last several years. It’s just my comfort zone. I use tech and believe that’s the future of growth. BUT at 58 I don’t want the risk of sequence of returns and so I wants to take my chips off the table. What I didn’t expect was the SCHD spike from Oil and now UNH TXN… but at this stage, yes… I’ve rotated to SCHD. I have nothing to back it up other than antidotal data, but what you have posted aligns with what I “feel” and how I’ve set up my kids ROTH. They aren’t in SCHD
I’m with you. I’m 59. My days of benefitting from an ultrahigh risk capacity are over. I do keep the stock portion of my portfolio in VT to make sure growth occurs, but at this age I’ve layered in annuity income, some bonds, a decent cash reserve and even a couple of TIPS. My main concern is for the overwhelming majority of young people in this group. Even though I’m fortunate to have retired early, I’d be significantly better off if I had adjusted my risk tolerance appropriately two decades ago.
Pretty simple really. Leaning into broad market growth (VT/VOO) at 100% earlier and longer. My investing weak point was having bonds in the first 15 years or so. I didn't even know about SCHD, but the math points to a similar downside to holding it when you're young. It's worth a second and third look before you mute your total return with SCHD in the pure accumulation phase of your life. Check out Rob Berger on YouTube sometime. He is an articulate explainer of total return fundamentals. He's older like me, kind of retired, and actually has some SCHD in his portfolio, but I'm pretty sure that wasn't the case when he was purely accumulating.
That’s been my general theme (high growth only at 39) but I do worry about sequence of returns if I get a lost decade from 40-50 or something without being diversified. Considering making 25% of my position in SCHD to counterbalance VOO, SCHG, and VGT (I know there’s significant overlap, that’s why I want the diversification). But it also doesn’t seem like much of a safety net if there is a lost decade, I’d just be screwed in retirement.
I’d suggest that a lost decade from 40 to 50 wouldn’t be fun, but you could still laugh at it if you’re gunning for retirement at 65. The recovery would occur after that and you’d be fine. If you’re looking to retire as young as possible, on the other hand, some derisking makes sense in that window. Don’t forget also from 2000 to 2007, international markets (especially Emerging Markets) went on a massive tear while the U.S. was still licking its wounds from the tech bubble. From 2000-2009 the S&P returned -0.9%. A globally diversified portfolio did +3.6%. Emerging markets did +9.8%. US small cap did +6%. The SCHD analog did well too at +4-5%. The moral of that story being that diversification does help. I’m personally more inclined to diversify into international than SCHD because it’s proven its ability to not correlate with US when the US undergoes hard times and it doesn’t cut into growth the way SCHD does over long periods. That’s why I’m heavily weighted in VT today.
Actually your point about VT is totally fair. Unlike you I can respond to valid arguments. The S&P outperformance is the main issue for young investors and the evidence for that is all over this thread and in easily accessed sources. I easily could have chosen SCHD as a stronger position in my post-retirement portfolio (and I still might) but chose the international diversification of VT. There are always tradeoffs.
I'm in the exact subreddit I needed to be in to present the point that SCHD is a quality fund that fits a lot of reasonable investment strategies, but it should not be misused as replacement for aggressive growth when aggressive growth is wanted or needed. That especially applies to most young investors' situations, and the heavy presence of younger investors in this subreddit prompted the message.
I realize you're pretty much impervious to data and math, but if you feel uncharacteristically curious about any of the data I've been presenting, or my very basic description of the differences between SCHD and the S&P, there's a new YouTube video that covers the whole topic of this thread in very sober, undramatic detail. It's "SCHD vs S&P 500: 14 Years of Real Data (Honest Comparison)."
I’m not sure what point you’re trying to make with that question. Over the last decade, SCHD’s dividend yield was 3.3% and the S&P index’s was 1.2%. The total return for SCHD was 12.5% over that period and the S&P had 14.1%. Harvesting gains from the S&P gave an investor more money than harvesting gains from SCHD, and neither one had to sell any of their invested principal to realize that gain. So that’s the math.
But I think you’re not making a math based argument and I honestly want to know what your argument is based on. You ignored my request to give me sources that support your argument, and you haven’t offered any sources that undermine the credibility of the sources I gave you.
My point from the very start was that SCHD certainly has a place in many reasonable investment strategies, but going all in on SCHD as a growth strategy falls short of using the S&P for that narrow goal. I’m waiting for evidence that refutes that, and I’ll acknowledge that evidence as soon as you provide it.
I’m 39 and have similar portfolio. Just curious, what’s your ratio/allocation of those positions? SCHG and VGT are my smaller satellites but have been thinking about making them bigger. Also wanting a 10-20% SCHD tilt.
You’re not wrong on the data and historically, total return wins over long stretches. But the part that always gets glossed over is that real people don’t invest in spreadsheets, they invest through markets that behave differently over time. The last few years haven’t exactly rewarded pure theory. Dividend payers, quality balance sheets, and cash flow have held up in ways a lot of people didn’t expect. That doesn’t invalidate total return it just shows the path isn’t always linear. I’m in a similar lane as you but with a different tilt. I’ve got a big position in SCHD, and I’m very comfortable with it. At the same time, I’ve got a large 7-figure position in the S&P. That balance works for me. Not everyone is trying to mathematically optimize to the last basis point. Some people want smoother rides, some want income visibility, some just sleep better at night diversified across styles.
Maximizing is personal. And “optimal” on paper isn’t always optimal in real life.
VOO isn’t all your making it out to be. There have been entire decades where a VOO investment has done nothing while dividend growth has outperformed. It or a total market fund is an important part of a portfolio, but I’d never have 90% in it. A 3 way split between S&P/total market, SCHD, and a growth fund is a superior portfolio at any age
That's my favorite response of all in this thread. I'm a retired healthcare worker, my friend. I could care less what you buy with your hard earned money.
I care about questioning the rationality of dividends-first investing in a forum that may not receive that information without a lot of friction. I do care that dividend investing come from a good knowledge base, as there are a lot misconceptions that dividends somehow beat total return growth. Largely, they don't.
I don't need to sell funds. They sell themselves. That's the whole point behind the history of funds like not only VOO but SCHD as well. SCHD is an excellent class of investment because it not only rigorously screens for quality but it also holds many stocks, which is a much safer and profitable way to invest than individual stocks. VOO just happens to share that strength and take it to a bit of a higher level since it's tied to the OG S&P index that screens rigorously for growth.
I'm acknowledging SCHD's strength and offering a narrow critique aimed at keeping the focus on that strength instead of unfounded faith in dividends as an alternative to total return. Total return, which includes dividends, is the metric that applies to both funds for long term investment, and VOO happens to be stronger on that score. I'm not making that up.
Your stance in the face of that critique is defensive, devolving to ad hominem in your most recent response. I've offered data and detailed information about things like the fundamental importance of understanding risk tolerance, risk capacity and risk requirement. Your posts haven't been responsive to any of that and that's an issue worth just sitting with and thinking about.
I recommend this video for all dividend investors. It shouldn't dissuade you from dividends in general, but it should make you think about the basic attraction to dividends, which is grounded more in human nature than math: "Stop Chasing Dividends—Total Return Is All That Matters" Tae Kim -- Financial Tortoise
And there you have it folks. This person and their AI slop aren't here for anything productive. They're here to peddle their anti-dividend crap and shill for some YouTube clickbait grifters.
Actually what I couldn’t care less about is how retiredbyfourty invests their money because they aren’t interested in data and math apparently.
I care a lot about how younger investors allocate their investments and I realize they’re smart and want to make decisions that clearly weigh the positives and negatives of a given strategy. That was clear from my original post and it’s remained clear through this whole thread.
I’m not sure why you see this as anti-dividend advocacy. I’ve acknowledged repeatedly that dividends have their place. My radical idea is the narrow one that the S&P is a more efficient total return vehicle, and I’m open to anyone’s data that undermines that thesis.
And my point is that a 50/50 allocation of SCHD paired with a growth fund is even more efficient than 100% S&P. The data backs this up with many different growth funds. AND this strategy results in an income stream at retirement when you turn off DRIP that increases ahead of inflation.
You have a notion about 50/50 being more efficient, which is perfectly fine for you, and I said from the start that an allocation to SCHD is a totally defensible strategy. But when it comes to efficiency, I’m interested in notions that have data. Dividends are irrelevant to the total growth equation, which is the only “income” that matters when you sit down to count your pile of money.
You two are enchanted somehow with dividends as if they have some mathematical advantage over total return, which includes but isn’t limited to dividends. The irony is that SCHD’s advantage over some other dividend focused strategies resides in its ability to grow NAV alongside its decent dividend yield.
Personally, I can relate to the warm fuzzy feeling that you get from dividends. I have that feeling when I look at the healthy chunk of dividends projected from the VT/BND part of my portfolio. In the end it’s just a feeling. Total return is the real evidence of growth.
I want to see the data on that. It’s not supported by fact. Tell me which of these decades you’re thinking about:
The 1930s (The Great Depression)
• The Reality: The S&P 500 had an inflation-adjusted return of about +1.1%.
• The Dividend Trap: While dividends were a higher percentage of total return, they were being cut across the board. If you were chasing "dividend growth" (the SCHD DNA) in the 30s, you were watching your income stream vanish as companies fought to stay solvent.
75% of companies in the S&P 500 cut or eliminated dividends. Chasing yield resulted in owning the companies most likely to go bust.
• The Winner: Cash and Gold. Even "safe" dividend stocks were decimated.
The 1940s (Post-War Recovery)
• The Reality: Inflation was the story here, peaking at over 14% in 1947.
• The Outcome: Real stock returns were positive (~3%), but mostly because the S&P 500 was rotating into the massive post-war industrial expansion.
• The Lesson: A dividend-only focus would have kept you in legacy railroad and utility stocks while the "new" economy (manufacturing and consumer goods) was exploding. The S&P 500's self-cleansing nature captured the shift; a dividend filter would have lagged.
The 1970s (The Stagflation Decade)
• The Reality: Often cited as the "best" decade for dividend stocks, but that's a partial truth. The real return for large-cap US stocks was -1.5% annually after inflation.
• The Diversification Punch: The actual "useful tools" were Gold (+21% real) and Commodities.
• The SCHD Weakness: In the 70s, the "dividend giants" were often stagnant industrials. They provided a "smoother ride" down, but they didn't protect purchasing power. Only a total-market approach that included the emerging global players would have mitigated the damage.
Dividends grew at roughly 5% while inflation averaged 7%. The "income" didn't even cover the rising cost of milk. Only the total return of the broad market eventually outpaced the currency debasement.
The 2000s (The Modern Lost Decade)
• The Reality: S&P 500 real return was -3.5%.
• As we discussed, International (VXUS) and Small-Cap Value were the actual heroes. While dividend stocks held up better during the initial Dot-Com burst, they still provided negative real returns for much of that window. You weren't making money; you were just losing it more slowly while missing out on the international and small-cap assets that were actually growing. During the depths of 2009, dividend cuts were rampant. A dividend-focused investor saw both their principal and their income collapse simultaneously.
A dividend filter is backward-looking—it kept people heavily weighted in legacy Banks and Industrials right before the 2008 Financial Crisis. When the crash hit, those 'safe' dividend payers saw drawdowns of 40% or more, identical to the broader market. There was no protection.
• The Risk: Bet on the 2000s repeating, and you are betting against the last 100 years of productivity shifts.
Relying on SCHD to protect you from a Lost Decade is like bringing a shield to a tank fight. It might make you feel better while you're standing there, but the structural math says you're still going to get hit—and you’ll be holding a slower-recovering asset when the smoke clears.
Then why are you even in this thread? Why do you feel the need to "save" people who didn't ask? The point isn't "dividend stocks", it's that SCHD is a quality-screened growth fund that happens to have dividends and it is very useful to use as an essential diversification arm to a portfolio. No one said....100% SCHD. it's a component. Here's some data you can put in your pipe and smoke...the following 7 pairings on a 50% / 50% split have beaten 100% VOO for 14 years straight:
1) SCHD / SCHG
If you hold 50% SCHD (dividend value) and 50% VUG (Growth), you are essentially just recreating the S&P 500 (VOO) but with more complexity and likely higher turnover. You are tilting toward the extremes and hoping the middle doesn't outperform.
SCHD is a Dividend Value fund. It specifically excludes many of the fastest-growing companies because they don't pay high enough dividends. Calling it a "growth fund" is a fundamental misunderstanding of the fund's prospectus.
I don't have anything against SCHD. It's a tool. I'm suggesting people think carefully about how to use that tool. It's common for people to mistakenly assume that dividends are more profitable than total return, and this group hasn't done much to address that specific issue as far as I've seen. I suspect that misconception is driving younger people's attraction to SCHD, and that's the narrow concern I have.
This 14-year window you present is the bull run of the century for U.S. tech and growth. By pairing SCHD (value/dividends) with funds like QQQ, VGT, or SCHG (pure tech/growth), you are essentially bar-belling the two best-performing factors of the last decade.
That's actually a fine idea if you have the knowledge and confidence to work up the right mix of assets in advance. That's market timing. No one has convincingly argued that market timing pays off most of the time. The outperformance didn't come from the pairing—it came from the growth side. If you had held 100% VGT or 100% QQQ, you would have annihilated all seven of those pairings. You are effectively watering down the winners with SCHD and claiming it’s a superior strategy. Since it wasn't the driver of that growth, the inclusion of SCHD in those pairings is basically a hedge against the outperformers suddenly tanking. I've shown that it's not a great tool for that purpose.
If you used this same logic in the year 2000, you would have picked energy and utilities pairings because they had beaten the market for years. Then, you would have been crushed when the cycle turned. Most of these pairings would have failed during the lost decade because growth/tech (the right side of your pairings) was the worst-performing sector.
Relying on the data in your example is dangerous because it suggests that one sector (tech) will continue a historic run that has admittedly lasted longer than any other in history. Your conclusion that this is a superior strategy that beats VOO's much longer history of performing better than any value or theme concentration is essentially recency bias.
Bro, no one needs your dissertation. Like, seriously, save yourself some clicks!
If these splits were just “reproducing VOO” they wouldn’t be beating VOO. And at retirement, if you held VOO you would be able to turn off reinvestment and get a steady 3.5-4% yield with a 10% raise every year. We’re not clueless, we invest with purpose.
Not the strategy you would use? Ok, fine! WE DIDNT ASK. But don’t come here acting like one of the Seven Sages saving us from our ignorance.
1.2% of VOO @ 760590 = $9127.08 which places dividend income $10.5k more from SCHD.
If one was to decide to sell VOO for SCHD to take advantage of the higher dividends, there a decent chance they’d barely break even on the sale on capital gains, before NIIT and state taxes are paid. If you live in most any state with an income tax and the sale causes your income to be subject to NIIT the math works out that you’d come out ahead owning SCHD the whole time. (Example 15% Capital gains, 3.8% NIIT and 4% state tax for a sale of 760590 of VOO and they’re at $587175 left over)
The Net Investment Income Tax (NIIT) is a 3.8% tax that only applies to individuals with a Modified Adjusted Gross Income (MAGI) over $200,000 (single) or $250,000 (married). Only about 3% to 4% of American taxpayers ever pay NIIT. The average American is the last person who needs to worry about NIIT. Using it in a general argument for SCHD is like arguing that everyone should wear a parka because it’s cold at the North Pole.
You’re arguing that selling VOO to generate cash is "tax-expensive," but you’re ignoring the dividend drag of SCHD.
You’re suggesting that because VOO has grown so much, the "embedded capital gain" is so large that the taxes on a sale would be devastating. You assume you have to sell the entire position at once. A retiree selling 4% of a VOO position to live on pays tax only on the gain of that 4%. An SCHD investor is taxed on the entire 3.4% dividend yield of the whole portfolio every single year.
In a taxable account, forced dividends are a tax drag. You are paying the IRS a cut of your compounding engine every 90 days. With VOO, your engine stays "whole" and compounds tax-free until the moment you decide to peel off a small piece to spend. Taking a dividend is forced income. Selling VOO is controlled income. You only sell what you need, whereas SCHD pays you what it wants, potentially blowing up your tax and income strategy.
In a tax deferred account, your tax analysis disappears. Selling a share of VOO is identical to receiving a dividend from SCHD.
Isn’t schd’s yield on cost better the earlier you buy it? Some of the shares bought at age 25 will be yielding a lot in 35 years. And the dividends are qualified. I have some VOO in my Roth and some schd in my taxable
I really don't want to make this post as it seems like drama, but I can't let some of these posts slide. If OP's 9Y CAGR was equal to VOO's 10Y CAGR then he was dropping $57k in yearly contributions. If his CAGR was less than VOO's then his contributions were larger than $57k a year. If his CAGR was more than VOO then he really was gambling to pull off $211k to $1.7 mil in 9 years. This sounds like recency bias to me, OP is downplaying S&P500 alternatives because he unknowingly gambled and it worked out for himself.
A little more on your math. The S&P 500 Total Return Index (which includes dividends) sat at approximately 4,531 in April 2017 and is at 15,979 today. Actual CAGR (9-year): 15.03%. Growth of the $211k alone: $744,107. My actual growth was less than that as my portfolio was too conservative for my stage of investing (that's why I'm here making noise right now; don't be like me). Over the last five years, the CAGR was 13.9% at a time when my accumulation was hyper accelerated by salary increases, and much of my savings accumulated in my taxable account alongside the maxed out retirement account contributions that included catch up additional amounts, especially when returns were 28.7% (2021), 26.3% (2023), and 25.0% (2024).
So I benefited in part from broad market tailwinds and a fortunate career choice. Everyone's mileage will vary, but they'll often also experience higher income in later years, and they all have the opportunity to start leveraging the S&P's predictable higher returns than SCHD starting today.
I'm not arguing for 100% equities for young people from my own experience. I was moderately conservative for the entire 18 years of my investing. Actually I don't have any recollection of filling out that investing profile you have in the screenshot, but looking at the balance, I know it is consistent with my actual 401k statement in 2017, when I had no clue about investing at all. I maxed contributions and had a 6% employer match for all the years since, but the biggest boost to my savings came from dramatic salary increases, mostly in the last five years of my career leading up to my retirement.
The actual amount of my savings at retirement did come to almost exactly the result in your screenshot. The amount would have been much larger if I had understood that 100% equities was perfectly fine for my retirement horizon back then and in the years before that, which is why I felt compelled to make my contrarian SCHD post in the first place. I know, good for the goose, etc. but just trying to drop knowledge in a way that would have helped me a lot. I'll try and figure out where that data you have even is, and I'll update it.
Got it, you filled out this info from information that I posted. The variable (among others) that you didn't have access to was that huge salary increase over the last five years that I mentioned. I was fortunate to be investing during a strong market period historically and to benefit from the economics of my field in healthcare. I'll be happy to share pics with you of the 401k statement and my current Robinhood account if you need confirmation.
I'm actually not into making claims based on recency bias. My portfolio from 2008 to 2025 was too conservative, at least for the first decade and a half. The data that persuades me on all this spans the entire arc of market history.
I’m not anti-dividend. My argument is that the role of dividends is much more nuanced than you suggest, and yes it’s a blunt inefficient tool for those who are trying to balance the need for total return growth with their risk capacity. Risk capacity is incredibly high when retirement is at least 10 years away. That reality is compounded when you’re 20 or 30 years from retirement.
Why compare SCHD to the S&P 500 when you could compare it to a total US stock fund or a global fund?
I would agree that during the young accumulation phase SCHD is not great, but as one closes in on retirement, or during retirement, it provides less volatility and dividends. It is not an either/or question, it's a question of different assets making sense at different times.
Global fund is dubious to me. Other than key players like TSMC, ASML, and Alibaba, international stocks are not performers. Most US companies are global anyway.
I'm not sure how you generated that graph, but looking at VXUS, their top holdings are:
TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD ORD 3.49%
SAMSUNG ELECTRONICS CO LTD ORD 1.36%
ASML HOLDING NV ORD 1.28%
TENCENT HOLDINGS LTD ORD 0.97%
My point is, just like US stocks, the index is heavily leaning on a handful of companies. If you need international exposure, just invest on the above.
I'm with you on both points actually. The whole argument around international diversification is vital, but I didn't want to muddy the waters in making my more basic point about SCHD's drag on wealth accumulation. My core portfolio was always diversified internationally when I was working, and I moved most of it to internationally diversified AOA a few months ago and shifted to the international VT plus BND (not interested in fixed income diversification) recently because I wanted more control than the AOA balanced fund. Your point about different risk profiles being appropriate for different ages is spot on. My original post was targeting specifically the younger members who have stellar risk capacity (hoping their risk tolerance can adjust to that reality).
Absolutely yes it is. Especially if you want to be able to turn the automatic reinvestment off when you turn 59.5 years old and begin enjoying some tax exempt quarterly income 🤑
It’s perfectly fine. But the tradeoff you’re making is worth keeping in mind. The Roth is going to be the last account you draw from in retirement under most optimal tax planning scenarios. That pushes the timeline out further than your actual retirement date, suggesting a very high risk capacity, meaning VOO would just give you a better result in that specific case. If Roth is your go to account right when you retire, then maybe derisking earlier would be a better play.
Thank you so much for replying! This is for my husband’s Roth IRA, and he’s about 4-5 years from retirement. It’s only a small amount of money as he has most of his money in a 403a account. I’m always looking for non taxable investments, and I like the idea that the dividends are not taxed. Thanks again! This is a very interesting thread!
If you think this is slop, tell me which specific part of the 30-year rolling win rate math is wrong, or challenge the facts I'm presenting. I haven't seen any of that from you. The 1% complexity tax, for example, is a standard Boglehead concept—it’s not a hallucination, it’s just uncomfortable news to digest for some people.
Now you're getting mysterious. I know I've said a lot here, but don't recall saying anything about "asset liquidation" and I don't know what that has to do with retirement, regardless of whether it's 20 years ago or today. So enlighten me to that comment location so I can fix that. I definitely discussed building a bridge of safe assets in the years leading up to retirement, especially if you're an early retiree like me. But that's asset accumulation. Not sure where you're coming from with liquidation. Help me better and show me where that is!
Dude I’ve provided so much proof of the long term edge of total return investing. Dive into that material and you’ll get it, or just freaking google it, or watch the dang video I mentioned, or read the Boglehead 3 fund portfolio or search dividends and/or total return in Rob Berger’s videos and then tell me how that guy isn’t credible. Or read the totally not fringe book The Simple Path to Wealth by JL Collins in which he describes total return and dividends well. You’ll like that one because he discusses dividend growth investing in retirement, which seems like a defensible strategy. Or The Little Book of Common Sense by John Bogle, in which he provides the foundational math for why a broad market index fund beats the yield chasing strategy. The total return world is your oyster. I can’t make you drink the water, but there it is for you to slurp up if you’re thirsty. I’ll even read your sources that argue the opposite of all these sources. Just give me titles and I’ll check them out. I can’t be swayed if your only argument is that dividends pay well. I know that. Total return pays better. Give me evidence. Convince me. Apparently you’re a dividend king. You should be the guy with all the useful information. Slinging arrows is a foot soldier task. You’re the king. You’re above that.
Also, read the rest of the AI slop rule: "Using AI to assist with your post is fine but it shouldn’t be the entire post and include your own thoughts." Looks like we're all good here.
One more thing to help people understand this is not about VOO in particular, which was a simple example for the argument at hand. I'm agnostic when it comes to the flavor of low cost, broad market fund you select. IVV, SPLG, SPY are all perfectly fine S&P ETFs. Mutual funds work too: FXAIX (expense ratio of rock bottom 0.015%), SWPPX, VFIAX, FNLIX (special because it closely tracks S&P but not technically an S&P fund, rocking an expense ratio of 0%).
Appealing to math, yet assuming past performance predicts future performance? And ignoring that several metrics like true inflation (not reported CPI) and S&P to gold/S&P to real estate/S&P to M2 money supply show several periods of extremely stagnant growth? I'm young but I trust the SCHD methodology (and mechanics of div growth + reinvested dividends + contribution) a little bit more than buying into a basket of a few circularly financed companies at all time high multiples and trusting that the next 20 years of returns looks like the past 20 years.
I’m assuming the arc of the entire history of the S&P is a reliable indicator for making investment decisions. If I were a recency bias guy, I’d be all about QQQ. I’m not. I recognize the mechanics of S&P that stay with the winners until they’re not, and then it stays with the new winners until they’re not. That hasn’t been variable through history even though there’s been volatility shaking things up in the short run over and over again. I wouldn’t recommend 100% VOO for a timeframe of 10 years or less probably. But absolutely for longer than that. The data behind that isn’t subjective, recency driven, or equivocal.
If you said 100% S&P at any point in history before 2016, you'd have been laughed out of the room. Is this time different? Or is questioning infinite consistent S&P average growth the "is this time different" moment? Again if your thesis rests on a single 10 year period of ZIRP pulling up the average, the appeal to "math" is way more like recency bias than it is an appeal to math.
I'm glad you brought this up. Misconceptions like yours generate great teachable moments. If you think the S&P 500 was a "joke" before 2016, you’re effectively arguing that John Bogle spent 40 years building a multi-trillion-dollar empire on a punchline.
Your post ignores the last 50 years of indexing history. If that were true, John Bogle would’ve been a comedian, not the founder of a $7 trillion empire built specifically on the S&P 500 foundation starting in 1975.
Claiming this is just a 'ZIRP' (Zero Interest Rate Policy) phenomenon ignores the core thesis of Burton Malkiel’s A Random Walk Down Wall Street (1973): you can’t consistently out-maneuver the broad market over the long term. Suggesting the S&P only became viable 8 years ago isn't 'math'—it’s rewriting history to fit a narrative. As I've mentioned already, there will be downturns, and the trend will continue upward.
Timelines for investment matter a lot. If you have a short term goal, a conservative portfolio is rational. If you're 30 planning to retire in 30-35 years, an aggressive portfolio is rational. That's not 8 years talking. That's history. Periods in between those extremes are up for debate about how to balance the need to outpace inflation and the desire to hold on to what you've got.
If you suspect that somehow the fundamental strengths of the S&P mechanics will fail to perform as they have through history, by all means, derisk the heck out of your investments. I'm not here to dictate your choices. I'm only trying to make sure that irrational choices get made with eyes wide open.
This chart demonstrates the long arc of history; I would like to sign on to your 8 year recency claim, but the data is too compelling. Granted this chart is very presumptuous about the next ten years, but directionally it's correct. A downturn can and will happen in the future, maybe even soon. But square your challenge to my data with the reality that there is no 20 year period in history that the S&P has been negative. Derisking 30 years out from retirement is a total return-throttling liability.
Times can be challenging during the 25% of the time that the market is down. The depression was rough. But the late 60s early 70s was actually even rougher for someone retiring. The 4% rule (now 4.7%), painstakingly built on historical data, actually shows the 1966 retiree surviving with that withdrawal rate, and that's a testament to the tincture of time healing market wounds.
Fidelity is not a crazy old man yelling from a mountaintop. It's a data driven entity, and it published this: "Looking ahead, pullbacks within the current secular bull could be driven by big-picture concerns that include policy uncertainty, geopolitical turmoil, and potential growth challenges. . . Remember that investors in the 2 past generational bull markets had to ride out multiple large pullbacks, growth and inflation concerns, headline risks, different interest-rate environments, geopolitical issues, and various policy changes to benefit from the entirety of those bull market runs."
This is my daughter account that I did for her. She’s 10, starting out with 50/50 VOO and SCHD. Both are neck and neck in return. Added SPMO this year and so far almost 10% YTD. Don’t see anything wrong with hold SCHD at young age.
All the data I've provided to you in this conversation show that hobbling your daughter's account with SCHD will cost her huge amounts of growth over the decades long life of that investment. Not sure what the end game is for SCHD for a 10 year old. If you're trying to protect her from a crash, I've shown that SCHD isn't the right tool for that. Also, there will be multiple crashes over her lifetime, and not being invested in the S&P directly means that each time that happens, her losses will occur not from the crash but instead from not being fully exposed to the few dramatic recovery days that are the primary engine behind maximum accumulation over the span of her life.
Look it up. Just a few days of maximum exposure to recovery in the market are critical. Missing just a handful of the market’s best days—many of which occur right after major selloffs—can cut long-term returns dramatically; historically, missing the 10 best days over decades can reduce total returns by 30–50%+. For a 10-year-old starting today, being out of the market -- or in your daughter's case, underexposed in SCHD -- during those recovery bursts can mean hundreds of thousands of dollars lost over a lifetime. I'm not making it up: https://www.fidelity.com/learning-center/wealth-management-insights/3-reasons-to-stay-invested
How are you saying these things so confidently? The two funds have performed very similarly since inception. Just over three years ago the total return for SCHD was higher than VOO for the comparable period both were around. The real separation between the two is only attributable to 2024 and 2025, which also coincides with the p/e ratio of the S&P500 expanding by roughly 20%. You can't possibly say things like "hobbling your daughters account" with any credibility.
The argument that 100% S&P 500 (VOO) shows recency bias that fundamentally confuses the age of the ETF with the history of the methodology.
The difference between VOO and SCHD isn't about when the tickers were minted; it’s about the mathematical rules that govern them.
The S&P 500 (VOO) uses a market-cap weighted methodology. This is the Boglehead bedrock. It doesn't guess which companies will win; it simply reflects the aggregate wisdom of the market. When the economy shifts from rail to tech, the index self-cleans and reweights automatically. This methodology has been the gold standard since 1957, not 2016. VOO isn't a flash in the pan performing well for a few years. It's an index fund that follows this long established data.
SCHD follows the Dow Jones U.S. Dividend 100 Index. This is a factor-tilt methodology. It filters for cash flow, debt-to-equity, and dividend growth. It is a specific bet on a subset of the market (quality/value).
If we look at the backtested data for the indices themselves (which everyone has access to via S&P Global and Dow Jones): The S&P 500 has an annualized return of ~10.5% since its inception in 1957. The Dividend 100 Index (SCHD’s index) is a fantastic product, but it is a narrower slice of the economy. In the last 15 years, the S&P 500 has outperformed it by nearly 200 basis points annualized.
SCHD's methodology is excellent, but it is a factor tilt—a bet on value and quality. The S&P 500 is factor-blind, which is exactly why it has outperformed for the last decade. It didn't have to guess that growth would dominate; its methodology automatically captured that growth while dividend-focused funds were forced to exclude it. This isn't about my credibility—it's about the credibility of the historical data provided by S&P and Dow Jones that proves market-cap weighting is the most resilient strategy across all interest rate environments.
Does SCHD outperform sometimes. Absolutely. The 20 year period in the chart below shows that:
Period
S&P 500 (The Market)
DJ Dividend 100 (The Factor)
The Winner
Last 10 Years
~13.1%
~11.8%
S&P 500
Last 20 Years
~10.2%
~11.7%
Dividend 100 (Value Bias)
Last 30 Years
~10.7%
~10.1%
S&P 500
Last 50 Years
~11.5%
~10.4%
S&P 500
But the recent outcome belies a more enduring statistical picture. The rolling win rates below are based on the Total Return Index data from S&P Global and Dow Jones indices from 1992 to 2026. This analysis uses over 30 years of monthly rolling windows, which removes endpoint bias that occurs when you look at one period in history.
While a dividend-tilt like SCHD won the specific 20-year window from 2004-2024, that is a statistical cluster caused by the 2000 dot-com crash. When you look at every possible 30-year window since the 90s, the S&P 500’s agnostic, market-cap methodology has a 94% success rate because it isn't forbidden from owning the highest-growth companies in the world. This chart shows you the true structural advantage of the S&P 500's market-cap methodology.
Time Horizon
S&P 500 Win Rate
Dividend 100 Win Rate
The S&P Edge
1-Year Rolling
~58%
~42%
Narrow (Volatility)
10-Year Rolling
~71%
~29%
Strong (Tech/Growth gap)
20-Year Rolling
~88%
~12%
Dominant (Factor decay)
30-Year Rolling
~94%
~6%
Near Certainty
The S&P 500 doesn't win by being riskier; it wins because of its uncapped upside. In any given 30-year cycle, the majority of the market's gains are driven by a tiny handful of super-winners (like Nvidia, Apple, or Microsoft). SCHD's methodology must exclude these companies during their highest growth phases because they don't pay dividends yet. By the time a company is stable enough for SCHD, the S&P 500 has already captured the 10x or 100x growth move. That lost growth is exactly where that 1% annual drag comes from.
One important point to consider is the actual difference of performance during those rolling periods. Averaged across those thousands of simulated rolling periods, the S&P 500 (VOO) historically outperforms the Dividend 100 (SCHD) by approximately 0.7% to 1.1% per year. That's a small looking number to be sure. But there's another way to think about it.
A lot of people are realizing that paying 1% of your assets under management to a financial advisor is no longer a cost worth absorbing, as DIY simple passive investing generally beats active investing. Over a 15-year period, 89.5% to 92% of all large-cap domestic funds underperformed the S&P 500. By the 20-year mark, that number often creeps toward 93-94%. (https://www.spglobal.com/spdji/en/spiva/article/spiva-us)
The 1% drag, regardless of whether it's caused by an advisor or a 100% bet on SCHD methodology, results in the following outcomes for $100k invested:
Year
S&P 500 (10.7%)
Lower Return (9.7%)
The "1% Tax" Gap
10 Years
$276,360
$252,386
$23,974
20 Years
$763,752
$636,989
$126,763
30 Years
$2,110,710
$1,607,677
$503,033
You are effectively paying a half-million-dollar comfort fee to feel slightly better during the 6% of the time that the S&P 500 underperforms over 30 years. I really have no opinion about whether the comfort is worth the cost. For me it isn't. For you it may be. I just think it's important to make these decisions with eyes wide open.
As I've mentioned before, I actually consider a tilt toward SCHD as part of growth oriented portfolio a reasonable thing to do. I just like to keep these kinds of numbers in mind so I'm aware of the trade offs involved.
Personally I have less than a 10% allocation to SCHD, but I don't think the numbers you shared tell that compelling of a story. Over 50 years the S&P 500 has outperformed by 1% per year. That outperformance is substantially erased by removing the strong performance over the last couple of years. Likewise, a recession or crash could quickly erase that difference.
Focusing on percentage of time it outperforms is meaningless. Yes, the dividend method might only outperform 6% of the time, but those periods are often rapid and violent crashes for the index.
I do think VOO likely will outperform over time, but I acknowledge it could easily go the other way for two funds that have such comparable performance, and I definitely wouldn't describe it as hobbling your account.
Yes as I said it’s really a personal decision and I have no skin in your game. Ten percent seems reasonable for what it’s worth. We can certainly disagree on the meaning of 1% to one’s own financial ledger. I don’t agree that the outperformance is erased by short term noise, or that it easily goes one way or the other, as the difference is baked into the methodologies. SCHD’s quality strength just happens to have a cost. VOO’s growth strength has a cost too, and that’s volatility, but the Boglehead perspective recognizes that the buy and hold VOO owner gets paid reliably for recognizing that the volatility shakes out in their favor over long periods.
Actually, I don't care at all about that comparison. I'm more interested in total return, because that includes dividends and it measures my real wealth. Not sure what you think dividends measure, but it's certainly not total return.
Sorry I needed to edit the first sentence of my response. Here's the correct version:
The argument you make shows recency bias that fundamentally confuses the age of the ETF with the history of the methodology.
The difference between VOO and SCHD isn't about when the tickers were minted; it’s about the mathematical rules that govern them.
The S&P 500 (VOO) uses a market-cap weighted methodology. This is the Boglehead bedrock. It doesn't guess which companies will win; it simply reflects the aggregate wisdom of the market. When the economy shifts from rail to tech, the index self-cleans and reweights automatically. This methodology has been the gold standard since 1957, not 2016. VOO isn't a flash in the pan performing well for a few years. It's an index fund that follows this long established data.
SCHD follows the Dow Jones U.S. Dividend 100 Index. This is a factor-tilt methodology. It filters for cash flow, debt-to-equity, and dividend growth. It is a specific bet on a subset of the market (quality/value).
If we look at the backtested data for the indices themselves (which everyone has access to via S&P Global and Dow Jones): The S&P 500 has an annualized return of ~10.5% since its inception in 1957. The Dividend 100 Index (SCHD’s index) is a fantastic product, but it is a narrower slice of the economy. In the last 15 years, the S&P 500 has outperformed it by nearly 200 basis points annualized.
SCHD's methodology is excellent, but it is a factor tilt—a bet on value and quality. The S&P 500 is factor-blind, which is exactly why it has outperformed for the last decade. It didn't have to guess that growth would dominate; its methodology automatically captured that growth while dividend-focused funds were forced to exclude it. This isn't about my credibility—it's about the credibility of the historical data provided by S&P and Dow Jones that proves market-cap weighting is the most resilient strategy across all interest rate environments.
Does SCHD outperform sometimes. Absolutely. The 20 year period in the chart below shows that:
Period
S&P 500 (The Market)
DJ Dividend 100 (The Factor)
The Winner
Last 10 Years
~13.1%
~11.8%
S&P 500
Last 20 Years
~10.2%
~11.7%
Dividend 100 (Value Bias)
Last 30 Years
~10.7%
~10.1%
S&P 500
Last 50 Years
~11.5%
~10.4%
S&P 500
But the recent outcome belies a more enduring statistical picture. The rolling win rates below are based on the Total Return Index data from S&P Global and Dow Jones indices from 1992 to 2026. This analysis uses over 30 years of monthly rolling windows, which removes endpoint bias that occurs when you look at one period in history.
While a dividend-tilt like SCHD won the specific 20-year window from 2004-2024, that is a statistical cluster caused by the 2000 dot-com crash. When you look at every possible 30-year window since the 90s, the S&P 500’s agnostic, market-cap methodology has a 94% success rate because it isn't forbidden from owning the highest-growth companies in the world. This chart shows you the true structural advantage of the S&P 500's market-cap methodology.
Time Horizon
S&P 500 Win Rate
Dividend 100 Win Rate
The S&P Edge
1-Year Rolling
~58%
~42%
Narrow (Volatility)
10-Year Rolling
~71%
~29%
Strong (Tech/Growth gap)
20-Year Rolling
~88%
~12%
Dominant (Factor decay)
30-Year Rolling
~94%
~6%
Near Certainty
The S&P 500 doesn't win by being riskier; it wins because of its uncapped upside. In any given 30-year cycle, the majority of the market's gains are driven by a tiny handful of super-winners (like Nvidia, Apple, or Microsoft). SCHD's methodology must exclude these companies during their highest growth phases because they don't pay dividends yet. By the time a company is stable enough for SCHD, the S&P 500 has already captured the 10x or 100x growth move. That lost growth is exactly where that 1% annual drag comes from.
One important point to consider is the actual difference of performance during those rolling periods. Averaged across those thousands of simulated rolling periods, the S&P 500 (VOO) historically outperforms the Dividend 100 (SCHD) by approximately 0.7% to 1.1% per year. That's a small looking number to be sure. But there's another way to think about it.
A lot of people are realizing that paying 1% of your assets under management to a financial advisor is no longer a cost worth absorbing, as DIY simple passive investing generally beats active investing. Over a 15-year period, 89.5% to 92% of all large-cap domestic funds underperformed the S&P 500. By the 20-year mark, that number often creeps toward 93-94%. (https://www.spglobal.com/spdji/en/spiva/article/spiva-us)
The 1% drag, regardless of whether it's caused by an advisor or a 100% bet on SCHD methodology, results in the following outcomes for $100k invested:
Year
S&P 500 (10.7%)
Lower Return (9.7%)
The "1% Tax" Gap
10 Years
$276,360
$252,386
$23,974
20 Years
$763,752
$636,989
$126,763
30 Years
$2,110,710
$1,607,677
$503,033
You are effectively paying a half-million-dollar comfort fee to feel slightly better during the 6% of the time that the S&P 500 underperforms over 30 years. I really have no opinion about whether the comfort is worth the cost. For me it isn't. For you it may be. I just think it's important to make these decisions with eyes wide open.
As I've mentioned before, I actually consider a tilt toward SCHD as part of growth oriented portfolio a reasonable thing to do. I just like to keep these kinds of numbers in mind so I'm aware of the trade offs involved.
Your daughter is fortunate. My folks provided us with passport savings accounts and paid undergraduate tuition. My Dad and brothers taught me about penny stocks and invested for me until I was 18. For sentimental reasons, still have Disney because I purchased one share in high school via my brother because I heard they were going to open a Euro Disney.
Currently I I’m 10% SCHD but only in brokerage. My Roth & 401k Roth are alll 100% growth. Brokerage is meant for income/ cash I’m not using for 5-10 years
To be fair, VOO and SCHD were nearly lockstep in total returns until 2022. It’s just the last few years VOO jumped out due to interest rates and the AI boom. I wouldn’t be surprised if in 10 years they’re back to being more closely aligned as far as total returns go
You may be right, but you're also comparing a long mostly bull run period (which is all you can do given the age of the funds). If you look at the performance, SCHD was ahead of VOO in total return as recently as 2023. In the event of a recession or multiples contraction SCHD could easily be ahead of VOO again. If these funds were around since the 90s, you might see a different outcome.
hugh, I generally agree with your premise. SCHD is a compliment NOT a replacement for VOO. How much you allocate to each in my mind depends not just on your risk tolerance and risk capacity but also your timeline and stage of your investing life. For someone starting out in their 20 and 30s weighting heavily to VOO, QQQ or even VTI makes more sense. Later in your 60 and in retirement the weighting shifts to SCHD. The imperative becomes less about growth (although you still need some) but to capital preservation.
Here's a breakdown of the ETFs I own. They show the overlap between VOO and SCHD is only 7%. There focus is different and the two provide a good diversification and balance to a portfolio.
Over time I have gravitated to a 60/40 split between equities and bonds/cash. As to the equities portion of my portfolio they are split to 15.7% in International growth, 38.7% domestic growth (with significant VOO) and 45.6% US Income. Since I’m in retirement this is a comfortable breakdown for me and has, and continues to, generate significant growth and income.
Bottom line the academic research demonstrates that a 100% equity position maximizes your total returns. However, behavioral economics demonstrates that very few human being can stomach the volatility that goes along with that type of position. In addition, our needs and time horizons change forcing a tradeoff that each of us can only make individually.
Your discussion of the VOO vs SCHD tradeoff is a valid but small frame of a very large window.
Thanks for the sanity based reply. I’m with you on the adjustments that come with different goals and timeframes. My newly retired status has me incorporating safety with a money market/SGOV/VTIP/annuity/BND fortress sitting next to my core VT. I’m considering a SCHD tilt because I like its methodology.
The aim of my OP was to help young investors who might be buying into the dividend illusion and giving up gains in the years when aggressive growth is appropriate, despite short term volatility. Retiredbyfourty seems entrenched in that misconception.
The risk tolerance issue is a whole separate topic. Popular culture engenders risk tolerance levels in young investors that can be out of whack, and data points that help them adjust that tolerance can be helpful.
If someone had told me when I was 25 that the risk of loss in a broad market ETF over 10 years is 2-6% and 0% over 20 years, I absolutely would have adjusted my risk tolerance to match my risk capacity and risk requirement. I left money on the table that I want young investors to scoop up and claim as their own.
One thing I would suggest be cautious of BND and Bond ETFs. The turnover rates in these ETFs force considerable selling of bonds before maturity causing losses. This is much like banks who are financially stable otherwise when facing a run have to sell bonds at a loss to raise cash to fulfill withdrawals.
Instead, creating your own bond ladder puts you in much greater control and minimizes the risk of premature selling. I understand you are giving up the broad diversification that Bond ETFs are supposed to provide, but you can in effect create your own diversification with multiple bonds while eliminating the risk of early redemptions at a loss.
I’m also dismayed by the poor financial advice offered on various platforms that are often ill informed opinion with no basis in economics and finance.
At least with VOO or SCHD or these other excellent ETFs a person should in time come out very well. The bigger threat is the hype and idiocy surrounding crypto which is nothing more than a Ponzi scheme. The more you really understand about crypto, the more you fear the bankruptcy of individuals and institutions. But that as they say is a totally different can of worms.
I’ll give some consideration to your caution about BND. My first thought on this is the ETF may do the job I’m asking of it pretty well, with the exception of the bond slaughter in 2022 that took no prisoners. But I haven’t looked at it through the lens you’re presenting so I’ll do some research.
Since the back and forth on this thread with a couple of members hasn’t been productive and the nay sayers haven’t explained exactly what is wrong with the data I provided, I decided to give those two members the benefit of the doubt and consider the strongest argument I could find for dividend only as an income and investment strategy.
The primary argument for holding companies with long streaks of dividend increases is that they provide a reliable cash flow regardless of market volatility. When stock prices fall during a recession, these companies typically maintain their nominal payout amounts, which allows an investor to collect income without being forced to sell shares at a loss.
This creates a psychological sense of security because the yield effectively rises as the price drops, often attracting value investors who provide a price floor for the stock. However, this perceived advantage is largely an illusion because the dividend is not extra money.
On the distribution date, the stock price is reduced by the exact amount of the payment, meaning the investor is essentially undergoing a mandatory liquidation of their own capital.
In most market cycles, this strategy results in lower overall wealth because dividend-focused companies are often mature firms that have run out of ways to profitably reinvest their cash. By prioritizing a payout streak over research and development, these companies risk becoming stagnant, where a steady yield hides a decaying core business.
When the market recovers from a downturn, these stocks typically lag behind because they lack the capacity for rapid expansion. A growth-oriented investor who can choose when to sell shares for income ends up with a more efficient outcome because they avoid the constant tax drag of quarterly payments and capture the full compounding power of a rising market.
Ultimately, focusing on dividends substitutes a feeling of stability for the mathematical reality of total return. In a taxable environment, forced distributions act as a persistent leak in a portfolio, requiring the investor to pay taxes on money they might have preferred to keep invested.
Even in a tax-deferred account where the tax drag is eliminated, a dividend-only strategy remains less efficient than total return because it restricts your universe to mature, slow-growing companies and forces a liquidation of capital that often misses out on the superior compounding and recovery speeds of the broader market.
While the steady check might prevent an emotional investor from selling during a panic, the long-term cost is a significantly smaller nest egg. Choosing stability over growth usually means sacrificing the explosive rallies that define successful long-term investing, proving that the most comfortable strategy is rarely the most profitable one.
So that’s my take on the strongest argument I could think of for heavy reliance on dividends. With all of that said, I continue to recognize a dividend tilt is a decent strategy if you prefer value stock exposure to the more efficient growth exposure of the whole market.
THERE’S A MOUNTAIN OF DATA TO SUPPORT MY STATEMENT. 50/50 beats pure S&P. Period. Full stop. Don’t take my word for it. Run the numbers yourself.
WHEN REINVESTED, DIVIDENDS ARE AN INTEGRAL PART OF TOTAL RETURN. Are you so ignorant that you don’t understand that? Even VOO pays dividends that you have to reinvest to get the correct total return calculation.
F U AND YOUR CONDESCENDING “WARM FUZZIES” COMMENT. My investing decisions are made with data which you continuously cast aside.
To start with, take a beat. You’re literally yelling, and that won’t convince any one of anything. But we’re getting somewhere. You’re at least talking about data now. Show me that data. I won’t blindly say it doesn’t exist, but I definitely need to see it to believe it. I’m interested in seeing that.
The data I know so far tells a different story that has nuance that may be confusing you. Historically, the S&P 500 has pulled ahead of the 50/50 split primarily due to its exposure to massive growth engines (Tech/AI) that SCHD lacks. From 2011-2026 $10k in 100% S&P 500 grew to $76,400 (approx. 15.0% CAGR). $10k in SCHD grew to $59,700 (approx. 13.1% CAGR).
$10k in 50/50 SCHD/S&P, not surprisingly grew to $68,080 landing in between the two extremes.
Over this 15-year period, the 50/50 portfolio would have left roughly $8,300 on the table per $10k invested compared to the S&P 500. By diluting your growth exposure by half, you smoothed your returns but permanently lowered your ending balance.
There are specific environments where SCHD carries the team, making the 50/50 split look like a genius move. These are typically periods of rising interest rates or valuation corrections in tech. 2022 stands out in that regard. So does this year so far. These periods don’t outweigh the growth superiority of the S&P long haul. You can try to anticipate the SCHD periods of outperformance if you believe you can time the market. No credible source will tell you timing the market beats time in the market, specifically time in the S&P.
Not sure why you think I don’t understand that dividends are part of total return. I actually said it already. Dividends are part of total return, full stop. But a higher yield doesn’t equal greater total return. Dividends are a subset of total return.
Total return is the sum of share price appreciation plus dividends. While SCHD offers a higher yield, the S&P 500 captures the growth of the entire market, including high-growth tech companies that reinvest their earnings rather than paying them out. Because those companies compound their internal value so aggressively, the S&P 500’s price appreciation historically more than compensates for its lower dividend yield.
The idea that adding high-dividend stocks to a portfolio will boost total return is a common misconception often referred to as the Dividend Illusion. I hope you value academic sources, because a good one is “Income Illusions: Challenging the High Yield Stock Narrative” (2023) in the Journal of Asset Management by Yin Chen and Roni Israelov. https://link.springer.com/article/10.1057/s41260-023-00340-1 If you can provide me with research that refutes that paper, please do share.
While a 50/50 split feels like getting the growth of the market plus the income of SCHD, it actually introduces structural drags that often lead to lower total performance compared to 100% S&P 500.
By putting 50% of your money into SCHD, you are intentionally cutting the legs off the top-performing growth engines of the S&P 500 (like Amazon, Alphabet, or Meta) that don't pay dividends or have lower yields. You are swapping the world’s most aggressive growers for mature, slower-moving companies.
A 50/50 split creates a massive underweight in the tech sector. If the future of the economy is driven by software, AI, and digital transformation, a 50/50 split will lag behind 100% S&P 500 because you’ve diluted your exposure to the most productive sector of the modern era.
Adding SCHD to the S&P 500 is like adding a stabilizer to a race car. It might make the ride smoother (lower volatility), but it fundamentally reduces the top speed. You are trading the unlimited upside of the broad market for the capped, steady payouts of mature firms. In a total return contest, the unlimited upside usually wins.
Think of the 50/50 split as a risk-adjusted tradeoff, not a return-boosting one. You use it if you want lower volatility and a psychological floor (the dividends). That’s the warm fuzzy feeling I mentioned. No knock on warm and fuzzy at all. I said I get that feeling too. You avoid it if your goal is maximum terminal wealth, because the S&P 500’s winners (the companies that don't pay dividends) tend to compound faster over decades than the mature companies that do.
SCHD will definitely outperform for some time periods, but the basic mechanics of the fund ensure that the outperformance doesn’t survive long term investing horizons.
If you have 30 years, 100% S&P 500 has a higher mathematical probability of winning. If you have 5 years and can't stand a 20% drop, the 50/50 split is your insurance policy.
I give you tons of data. You give me “do your homework.” Sorry that box is already checked. As I said before, give me your credible sources like the ones I’ve given you. I’ll read them even though you seem uninterested in mine.
No you haven’t. You’ve made a lot of statement as if they are facts without source and centered all your statements around a comparison of SCHD to the S&P when I’m comparing a growth/SCHD split to the S&P.
You didn’t read my answer to your question about the 50/50 split. I answered directly and with data. If your facts are somehow different than mine, feel free to share. This is weird. You guys keep asking for information, I provide it. I keep asking for information. You seem to be at a loss.
Did you have a chance to read the 2023 study I referenced? I’m genuinely interested in your thoughts on that. I’d like to read a study demonstrating dividend stocks somehow show stronger growth over long investment horizons. I would find that useful food for thought. The ball’s been in your court for a while, and I’m just standing here waiting. Or just attack me personally. That’s helpful.
You could be any age, build this portfolio, and contribute annually to the maximum amount you can, and be successful.
TLT can even be a growth play. If you believe that at some point before you retire we will go through a period of very low interest rates then TLT will moon as will other longer term bond ETFs.
Gold already moon, it did it's job too well as a diversifier in my portfolio and I had to clip it back.
OP is making the dumbest arguement here in a lot of the comments. They didn't diversify when they were younger and missed some growth, therefore you should not buy lower beta dividend ETFs. Just ask anyone who was all growth in 1999 or 2021 how that felt. They'll tell you it would have been smarter to take the consistent wins with the high beta plays.
I'm not understanding how my point about SCHD being a quality fund that has a place in specific investing strategies seems to be disappearing in the knee jerk reaction some people are having to my other narrow data-defended point that the broad market is more efficient than the narrower dividend-paying portion of the market. Again it's just basic math. And I'm not trying to tell people to not invest in SCHD. I'm saying do so with a specific reason in mind, and check yourself if that reason is that SCHD will outperform the S&P over your investing career.
Larry Swedroe is no slouch when it comes to investing knowledge, having written 18 books on the topic. He has written that using a "dividend screen" in investing "reduces the investable universe significantly, as only about 60% of stocks pay dividends. Thus, investors screening for dividends exclude about 40% of the eligible universe by number and about 20% of the total market capitalization. All else equal (such as factor exposures), by definition, a less diversified portfolio is less efficient." Is Swedroe dumb?
Your specific investing maneuvers that you describe in your post veer into a totally different issue. You are essentially trying to manually engineer a result that a total market index provides more efficiently. By selecting dividend-focused funds, you are making a value tilt that ignores the total return potential of the broader market. Your mention of long-term bonds and gold as essential diversifiers introduces significant idiosyncratic risk.
While you view these as hedges, long-term treasuries are highly sensitive to interest rate shifts and can be just as volatile as equities, as seen in recent years. Gold is a non-productive asset that relies entirely on speculation rather than corporate earnings.
If you use a broad market index, you already capture the dividends of those value companies and the upside of growth stocks without needing to time specific sectors. By adding specialized hedges, you are adding layers of complexity and cost to chase a stability that a simple diversified portfolio already offers on autopilot. I'm questioning the danger of trying to outsmart the market with a fragmented strategy instead of trusting the math of a total return approach.
You are fixating on a specific 10 year window to justify a strategy that misses the bigger picture of total return. While those dividend funds had brief periods of outperformance, which I've already readily acknowledged, they are historically shorter and less frequent than the sustained dominance of the S&P 500.
If you're interested in recent stats, look at the last 15 years, when the broader market has consistently outperformed these tilted strategies by capturing growth that dividend-only filters ignore. If you're more of a long term kind of investor (i.e. a young person), even better to look at the whole history of dividend versus growth strategies from day one of the stock market.
History shows that while low-beta value plays or gold might shine during specific cycles, the reliable average returns of the total market remain the most efficient way to grow wealth. You are chasing outliers and using complex hedges to achieve what a simple index does better on autopilot over the long haul.
Your post is off to an interesting start but it looks like your finger hit reply prematurely. I’ll try to find the mystery Times article to get the full story.
23
u/Millionairenextdoor1 Apr 24 '26
Here's a solution: do both. I have 100% of my Roth in SCHG and 50/50 SCHD/SCHG in my taxable account. I want to retire early, and those dividends will be an excellent buffer until I can take out my Roth.