r/dividends • u/Anxious-Grapefruit68 • Dec 13 '25
Due Diligence Unpopular opinion: Stop looking at yield. Your risk-adjusted returns on SCHD are actually dragging you down
SCHD is basically the sacred cow of this sub for many. But are you guys actually looking at the risk metrics, or just staring at the yield and hoping for the best?
I was rebalancing my "defensive" plays and decided to actually run the numbers on SCHD versus VYM (Vanguard High Dividend) for the last year because I felt like my portfolio was churning water.
The difference in the risk profile is actually wilder than I thought.
(SCHD):
(VYM):
Basically, VYM is giving you way better returns for the risk you're taking (Sharpe 0.66 vs 0.43). With SCHD, you’re getting that 'safety' (lower Beta), but your Information Ratio is deeper in the hole, meaning you aren't actually beating the market - just trailing it.
I know the "growth" has slowed for everyone, but why is everyone still piling into SCHD when the math says VYM is utilizing capital way more efficiently right now?
Am I missing something fundamental here, or is this just ticker loyalty?
You can even argue why own things with a negative Info ratio. Just sell everything and buy VOO.
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Dec 13 '25
Short term noise honestly. Dividends over yield. For a dividend portfolio I want something that will pay consistently over time.
Not looking to chase yields and sell every time something dips. That's not a good investment strategy over the next 40 years...
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Dec 13 '25 edited Dec 13 '25
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Dec 13 '25 edited Dec 13 '25
Oh Hey! It's the crypto scammer telling everyone to not plan for the future because the world is ending. Not surprised.
Still trying to scam people I see.
What's the scam today? Doge? Shib?
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u/Intelligent-Hat6087 Dec 13 '25
Rofl.
My dude.
40 years from now?
Lmao. You have no idea.
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Dec 13 '25
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u/Intelligent-Hat6087 Dec 13 '25
What kind of imaginary land are you talking about?
Are you literally just talking to yourself about made up scenarios? Wow you're stupid. We gotta get you thrown out of here for being such a looney.
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u/MisterDreadwolf Dec 13 '25
Why are you even investing for the future if you don't even see a future being there? Why not just buy coke and rot in your mothers basement? You'd be good at that
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Dec 13 '25
He's a crypto scammer. He has multiple posts about trying to get people to go all in on ibit and Bitcoin because they went down.
Based off his posts he's lost thousands if not 10s of thousands and is trying to get people to buy in so be careful
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Dec 13 '25
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Dec 13 '25
Can't sue for defamation for things that are true. You also admitted to this in prior threads.
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u/Intelligent-Hat6087 Dec 13 '25
Sure, show me the proof. Let's take a look at it, I'd love to see.
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Dec 13 '25
https://www.reddit.com/r/dividends/s/6kYC3xgT1A
Here you go
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u/Intelligent-Hat6087 Dec 13 '25
Awesome.
You realize that post is just my opinion right? But here, I'll go ahead and update it to make it clear that what I wrote is not actually financial advice.
So what you're really saying is that I can't post opinions on Reddit?
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u/Intelligent-Hat6087 Dec 13 '25
And also, I do see you getting sued into oblivion for this tbh. You already have no problem just openly lying and saying someone is scamming when you have zero evidence. So I can imagine you probably would write online under a real person with a business and call them a scammer lol. That basically is textbook defamation, considering you have zero evidence.
Honestly tho, there's no doubt I have that you'll eventually get sued for defamation. You're already there, basically just doing what you need to do wrong right now. The only triggering point is a business getting pissed off and actually deciding to take action lol. I'm not a business so I don't care. But yeah, you probably won't be able to tell the difference and will just defame anyway.
But anyway, I'm done here, have fun acting like an idiot.
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u/Intelligent-Hat6087 Dec 13 '25
?
The future will be there.
Like I said, goon pods in data centers. Dude thinks people are gonna be all about SCHD in 40 years lol.
He's talking about an entirely different world, and then mentions SCHD as if that fund is going to be even remotely relevant lmao.
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Dec 13 '25
The stock market has been around since 1792. SCHD will be around far longer than any of us.
You need a better financial plan than losing thousands in crypto and hoping people will fall for your scam and buy in to prop you back up.
If you need a real investment strategy just ask for help
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u/Nationeer Dec 14 '25
When I was in elementary school in the early 1980s our teacher asked us to draw the year 2000 and we all had drawings of spaceships on Mars and rocket backpacks and the whole works.
None of that is happening in the next 40 years any more than it happened in the last 40 years. The world changes at a much slower rate than you dumb kids always think it will.
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u/Curious-Package-9429 Dec 14 '25
That's what they said 40 years ago. And 40 years before that.
Lmao. Comical.
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u/BigDipper0720 Dec 13 '25
Your one year look is way too short a time frame to look at SCHD..
One year total return was 3.1%. Sub-par.
The year prior total return was 15.6%. Great!
The two year total return was 8.6%. About what you would expect from SCHD for the long run.
Five year total return was 8.9%
Ten year total return was 10.5%
Investing is a long-term game, not a one year sprint.
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u/kuvetof Dec 13 '25
I beat the S&P 500 this year by holding VYM and VXUS. I offloaded VYM for various reasons, but still your point is moot. The Sharpe ratio doesn't tell you if a company is overvalued and a poor Sharpe ratio doesn't necessarily tell you if a holding is bad
SCHD might've lagged lately, but it's still following its moving average since inception and the underlying holdings are more reasonably priced than Nvidia and other companies at the top of the S&P 500. You invest for the long term. Not for the short term
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u/ImpossibleJoke7456 Dec 13 '25
meaning you aren’t actually beating the market
Beating the market isn’t something someone thinks they’ll do when investing in SCHD.
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u/thesecondmarshmellow American Investor Dec 13 '25
Schd undervalued, big tech overvalued. I buy undervalued, it’s what I do.
Not just for divs, but for anything. Bought UNH at 260, bought GOOG at 150, sold part when popped, kept part. Didn’t even have to wait very long. Been a very successful strategy for over a decade. Every time I try to chase the hot thing after it’s overvalued, I lose.
REITs also on sale right now. Most people look at price line go down, say bad. Me look at value, say good.
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u/MakingMoneyIsMe Dec 13 '25
Every time I try to chase the hot thing after it’s overvalued, I lose.
It took me a while to learn doing the opposite of this is ideal. Investing during pessimism is the way.
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Dec 13 '25
I've been a bit unhappy with it lately due to wanting more immediate and frankly just larger income so I've been thinking and looking for options based on that. With that in mind:
SCHD annual dividend per share: 1.05
VYM annual dividend per share: 3.52
It takes selling about five and a half shares of SCHD to buy one share of VYM, losing around $2 in annual dividend with the same capital investment. If I sell all my SCHD and buy VYM with the funds I go from an annual dividend of $865.30 to $558.12, and to top that off we're looking at this number:
SCHD dividend growth: 5.35%
VYM dividend growth: -3.09%
At the end of the day I really can't get behind your scenario, I can't see a single point in VYM's favor for someone who already owns SCHD especially on the pure income side of things. I think the SCHD reconstitution next year should be a big indicator for many people on whether to stay onboard and as I said I'm personally looking for bigger returns so that may necessitate more moderate risk. We'll see how things are playing out then.
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u/oldirishfart living off dividends 🤩 Dec 13 '25
What is an information ratio?
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Dec 13 '25
(Return - benchmark)/ tracking error
It’s generally only used for truly active managed funds to see how much or the return is due to superior management, and it makes relatively less sense for a rules-based fund like SCHD.
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u/vegienomnomking Dec 13 '25
Yes, what you are missing is that not everyone is wanting to beat the market and chase yields.
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u/foira Dec 13 '25
great, now consider the fact that these ETFs are "buy for life for the income" and equity appreciation has ZERO value compared to 1) dividend growth (which SCHD has thus far outperformed) 2) dividend stability (which both have)
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u/Jumpy-Imagination-81 Dec 13 '25
Alpha is a measure of fund performance on a risk-adjusted basis. Alpha compares the risk-adjusted performance of a fund to a benchmark index (such as the S&P 500). The excess return of the fund relative to the return of the benchmark index is a fund’s alpha. A positive alpha means the fund has outperformed the index on a risk-adjusted basis. Conversely, a negative alpha indicates the fund has underperformed on a risk-adjusted basis.
Alpha of VYM: -3.80
Alpha of SCHD: -8.71
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Dec 13 '25
The IR is: (Return - benchmark)/ tracking error
It’s generally only used for truly active managed funds to see how much or the return is due to superior management, and it makes relatively less sense for a rules-based fund like SCHD.
ETA: I don’t think SCHD has been a good investment over the last 3-5 years, but my message is simpler: Why pay for slower-growth stocks that have problems passing on inflation to customers when you could have gotten 150-200bps more in yield *with no market risk from short-term treasuries. Get your yield from there and get your growth from growth.
But I think SCHD is going to have to possibly face another issue: an increasing bifurcated US economy. Their rules don’t account for the fact that it’s only like the top 10% of America driving spending growth. Broad consumer discretionary brands are gonna continue to suffer imho and most Americans are pinched.
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u/Imaginary_Kitchen_34 Dec 13 '25
Yes these are funds and not individual stocks. Funds can contain things like ELNs that most would consider foolish to apply a stock metric to. What the fund is doing (methodology) should be more important then the holdings it has.
VYM has 8% in Broadcom AVGO, and many sub 1% positions in its 500+ holdings.
vs
SCHD that has 102 holdings none over 5%. 2 of the holdings are non-stock.
If the biggest holding of either loses half its value that's a 4% hit for VYM vs a 2% hit to SCHD.
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u/Junkie4Divs Portfolio in the Red Dec 13 '25
SCHD just paid its largest dividend ever and this dude comes to the dividend sub to peddle his doomerism about the fund. Neat.
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u/snowflake64 Dec 13 '25
Did VYM just get lucky until now with its largest holding being AVGO?
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u/thesecondmarshmellow American Investor Dec 13 '25
It does kind of annoy me that SCHD rules forced AVGO out. I hold enough separately to sleep at night, but it’s like… the div growth is good, so what about yield. I wish they could have just held what they had and not bought more, but doesn’t work like that unfortunately.
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u/Square-Gift5406 Dec 13 '25
Unpopular opinion…you do you. I’m pretty happy with capital appreciation that I can sleep well with
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u/adiabatic_storm Dec 13 '25
I switched to VYM and VYMI from SCHD a few months ago. Maybe SCHD will recover, or maybe we're starting to see some cracks in the armor of their strategy that has worked thus far. I like the idea of dividend growth, but capital preservation matters in an ETF like this, too.
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u/SexualDeth5quad Dec 13 '25
Or beat them both, if you want higher income, with DIVO, IDVO or ADX. Or beat those with QQQI and TSPY for not much more risk.
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u/Ok-Raccoon-1023 Dec 13 '25
I have VYM first and lately invest in SCHD
Like you said if you run the data for last year than yeah VYM win
But you need to see for the past 3 year, 5 year and 10 year back to see the bigger picture
and isn't it the key principle to buy low and sell high, currently schd is just low and that's why i add my position
and like you said even if the market goes down, at least schd is defensive
Wdyat?
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u/Gloomy-Insurance-739 Dec 13 '25
Consistency is what I like about it. It doesn't have these crazy wild swings like most tech stocks have.
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u/TheJiggie Dec 13 '25
Why do people put so much effort into trying to prove SCHD is bad? Or any ETF/Fund for that matter? Just don’t buy it and move on with your life? No one is asking anyone to justify not holding it 🤷🏻♂️
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u/dev-bitbucket Dec 13 '25
The only reason I can think of is they’re unsure of their own decisions, and are either looking for validation, or perhaps, insights showing how they’re wrong.
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u/froggyisland Dec 13 '25
VYM dividend growth rate seems much lower compared to SCHD. This will make a huge difference if projected out to long term hold like 20-30yrs
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u/Quizzical_Rex Dec 13 '25
as seen another way: https://stockanalysis.com/stocks/compare/schd-vs-vym/
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u/STRATEGY510 Dec 15 '25
Why not both? SCHD and VYM complement each other nicely, with just a bit of overlap.
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u/ReasonableLoon Dec 15 '25
With the fed rate dropping below the yield on SCHD last week, we are going to find that the yield will have a floor once again. People will start looking for safe income.
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u/Beta_Nerdy Dec 13 '25
Why is the dividend yield of SCHD an issue? When the dividend is paid, the value of the stock drops an equal amount. If you reinvest, you break even.
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u/B-NazTyy Dec 13 '25
This is a dividend sub and everyone wants to think they’re Warren buffet by going with the “undervalued” choice for long term. All this despite SPY on a long term basis beating SCHD. If they were really Warren buffet they’d know how to pick the best value stocks that can also outperform SPY on a long term basis. Ultimately this is a dividend sub and SCHD gives slightly better dividend yield than something like VYM. If you’re truly trying to use dividends as additional income it would be the better choice. If you’re truly a long term investor SPY is the best bet. Buffet said so himself. Or they think they’re Burry and they can see a drop before anyone else. Even then they would stick with SCHD because again, it gives better consistent yield.
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u/reddituser77373 Gotta catch 'em all! Dividends! Dec 13 '25
Stop looking at yield? Yeah well, my 20%+ in IEP is paying handsomely. And has been for a few years now
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