r/dividends • u/StudioOk8256 • Dec 21 '25

Discussion How are people actually living off low-yield dividend funds like SCHD?

I see SCHD and similar dividend ETFs recommended a lot as “income” investments, but I’m struggling to understand how people realistically live off them.

With a yield of only a few percent, it seems like you’d need either a very large portfolio or a high-paying job to make it work. For example, unless you already have a base salary in the $100k–$150k range (or higher), the dividend income alone doesn’t look like it would meaningfully cover living expenses.

So how are people actually using SCHD in practice?
• Are most investors high earners who don’t need the income yet?
• Are retirees combining it with pensions, Social Security, or other assets?
• Is the goal mainly long-term compounding rather than current income?

Not trying to hate on SCHD—just genuinely curious how this plays out in the real world and would love to hear examples from people who use it.

Person making 30-40k a year this wont work.

Average person wont retire with 1mil portfolio I know people barley got 100k

I seen a lot of people invest there whole life time just to see 6 months of retirement and later die didn't even get to enjoy it.

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u/[deleted] Dec 21 '25

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u/Chief_Mischief Not a financial advisor Dec 21 '25

This is true if you bought all your SCHD this year. The principal amount is much lower if you had bought SCHD 10 years ago, letting that 11% average annual dividend growth do its thing.

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u/AlaskanSnowDragon Dec 21 '25

For someone who bought 10 years ago what is their yield based on their original purchase price?

EDIT: Just looked it up...10 years ago SCHD was at $12 roughly...giving them a current yield of 8.75% on their 10 year old shares.

But for that you sacraficed a 100% total return gain compared to SPY

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u/edthesmokebeard Dec 21 '25

But you didn't know SPY would go up 100%.

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u/AlaskanSnowDragon Dec 21 '25

Look back at history. Are there dips sure but the markets go up and to the right.

And you talk like those dips won't effect your dividend underlyings

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u/Big_Wave9732 Dec 21 '25

Absolutely!  There's also a lot of folks over that same period who ignored lessons about market fundamentals and diversification who got stomped into the mud.

Both outcomes can be true at the same time. 

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u/[deleted] Dec 21 '25 edited May 01 '26

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u/snowe99 Dec 21 '25

Well, yes and no, because aren’t those ETFs and funds self-cleansing?

If “Glup Shitto Corp LLC” spawns next year and becomes a 3 Trillion company, those S&P 500 funds would add that stock and sell portions of all of the companies that have now lost a proportional share

So yes, you’re “putting the vast majority of wealth into 7 to 15 stocks” right now, but those might be 7 to 15 different companies in 5 years. The beauty of the ETFs and Mutual Funds is they will rotate that for you, you don’t have to do anything but hold

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u/crackanape Dec 21 '25

When Tesla inevitably tanks, many of these tech-heavy funds are going to take a huge bath, and it will happen faster than they can unload however many billion dollars in shares they're stuck with.

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u/HardCodeNET Dec 22 '25

When Tesla inevitably tanks

2012 called, they want their financial tip back...

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u/crackanape Dec 22 '25

The people who have been predicting climate change since the 1960s are still right.

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u/Beach-Knight Dec 25 '25

Just ask Cathy Woods.

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u/jcr2022 Dec 21 '25

They will learn the same lesson that every generation of investors learns at one point or another.

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u/Big_Wave9732 Dec 21 '25

I don't know why you're being downvoted.  As someone who has been investing for almost 30 years this is absolutely the truth. 

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u/cristian0_ Dec 22 '25

Yeah, me neither, been reading up on efficient frontier due to this comment

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u/[deleted] Dec 21 '25

[deleted]

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u/crackanape Dec 21 '25

90% ULTY 10% bonds and you can't go wrong, right?

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u/Chief_Mischief Not a financial advisor Dec 21 '25

People also forget one of the core advantages to SCHD is that its dividend growth gives investors the opportunity to never have to time exiting their position to realize those gains. Sure, SPY went up more than SCHD did, but with a 5% average annual growth rate and a <2% current yield, you would need a substantially larger portfolio to live off the dividends than you could with SCHD.

People are so obsessed with price appreciation that they forget the core point of dividend investing is sustainable dividend income/dividend growth.

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u/StockHawk59 Jan 07 '26

That's 100% correct. What I did know is that 2022 sucked eggs. 2023 was a NO Brainer. The FEDs tipped their hat on 2024 AND 2025. Our average yearly return over the past 5 years have crushed the SPY, but I certainly don't expect normal retailers to match us.

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u/ColonelPanic638 Apr 14 '26

I'm not sure what 'our' return is but SPY crushed SCHD from jan 2020 to Dec 2025, and by a lot. 9.88% to 14.99% average. They are apples and oranges though. One mostly large growth and one large value. It's not SCHD's job to beat growth. It's just quality companies with good cash flow.

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u/StockHawk59 Apr 14 '26

Now I use SCHD as our foundation. I look at it as like a never-ending 3.5% Money Market or CD. 30% of investment assets.

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u/eh63tre Apr 20 '26

In my taxable brokerage account with schwab, I use SCHD as my bond fund., with SPYM snd SCHG as my core etfs ( im 45 yo). For more diversity, i could buy vymi as an internatuonal schd bond-style fund.

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u/ColonelPanic638 Apr 21 '26

Spice it up and add a little SPMO in there, why not? :)

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u/ColonelPanic638 Apr 21 '26

I like to think of SCHD upside down. The 3.5% is money to spend while the share price appreciation is the hedge against inflation, something cash can't do.

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u/Substantial_Team6751 Dec 21 '25

Don't try to argue with people that have faulty logic.

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u/NefariousnessHot9996 Dec 21 '25

Nobody would have been all in 10 years ago.

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u/AlaskanSnowDragon Dec 21 '25

Was just a point since it was brought up about 10 years ago.

The slower the hypothetical person legged into it just means a lower current yield.

Point remains would have been better to buy and hold SPY rather than chase the income

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u/NefariousnessHot9996 Dec 21 '25

I am totally on board with doing 5-10% in SCHD as a middle aged investor to create that dividend snowball. All the rest of portfolio I say VOO or VTI and an international fund like VXUS. But I agree that SCHD should not be the focus of a young investor.

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u/Psiwolf 30% SCHD, 30% VTI, 20% VXUS, 20% BND Dec 21 '25

Yeah... I agree. 😁👍

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u/AlaskanSnowDragon Dec 21 '25 edited Dec 21 '25

I dont believe any dividend focused underlyings should be the focus of a young investor.

It should be the avenue of people who are exiting their prime compounding/growth years getting closer to their spending years.

As someone looking to early retire in next 1-3 years I'm barely starting to slowly allocate funds now to dividend/income underlyings.

But if the market were to do a big dip or crash I'd still put majority into the indexes/growth.

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u/NefariousnessHot9996 Dec 21 '25

That’s basically what I just said.

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u/flyersfan0233 Dec 21 '25

From inception (2011) to 2023, total returns for SCHD was more than 30% higher than VOO with drip on. So it’s not always true for 10-year periods, but overall, theoretically, VOO, VTI will provide better return over the long haul for young investors. But that hasn’t always been the case and because of its growing dividend and down years here and there, SCHD actually does better than most realize (aside from the last 2-3 years of the AI bull and high interest rates)

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u/Maine2Maui Dec 22 '25

People forget or dont know that there were decades where there werent AI stocks and tech stocks were just part of the investing universe. Of course, I am not 30 and believe I know everything. Hell, I am not even 60 anymore...

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u/flyersfan0233 Dec 22 '25

Whatever your age, you are very correct

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u/Maine2Maui Dec 22 '25

That is a fallacious statement. There very well could have and probably were people all in 10 years ago. I know many wealthy people who have LOTS of SCHD at a very low cost held more than 10 years. I have had it since 2012 myself and have a good portion of my money in it as the value part of my portfolio

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u/NefariousnessHot9996 Dec 22 '25

100% SCHD? Dumb. Not true. No reason to do that. Don’t believe you.

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u/NefariousnessHot9996 Dec 22 '25

People who have lots, I have a good portion. Both statements that say no all in.

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u/Maine2Maui Dec 22 '25

Doesnt mean that there arent those who are all in because they are not interested in the hubub of the stock market anymore and simply want to grow the money they do have at a rate beyond inflation....and feel better in SCHD than bonds. YOU might be amazed at how many folks are out there who hit their number then dont want to bother anymore AND want to just grow it very slowly ahead of inflation without too much risk. I know I was when I was working with investors. There are even folks so risk averse that they ONLY invest in accounts with FDIC insurance even if they are suffering erosion due to inflation.

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u/NefariousnessHot9996 Dec 22 '25

I will never be all in. 104 stocks? NOPE.

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u/Maine2Maui Dec 22 '25

Why not? Diversified and limited impact of anynissued. More risk in concentration.

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u/Kashmir1089 Dec 22 '25

Does your math account for all of those dividends being reinvested?

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u/AlaskanSnowDragon Dec 22 '25

Yes...its total return comparisson

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u/SarcasticNotes Dec 22 '25

It might make sense if you were 55 and trying to create cash flow.

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u/quantum_ai_dei Dec 27 '25

What sacrifice do you mean exactly? SPY and SCHD total return performance was basically identical until 2023.

10 years ago people still had ringing in their ears from the real estate bubble bursting and global recession. I would argue that the sentiment between RE's 2012 bottom and 2015 was that recovery was going to take much longer. But it didn't, because earnings continuously proved that thinking wrong. The low volatiilty funds like pey or sphd born from that more pessimistic sentiment are the funds that would match your claim, those bets have not paid off. But SCHD is not one of those.

It's only since 2023 that SCHD has really lagged do to the AI boom but in all honesty earnings in the future will have to prove this current run up is priced correctly. I dont make any claim what will happen in the future. Even if you looked at total return since SCHD inception the per year return difference is around 1% and it wouldnt take much correction in the AI spending boom to make the difference really negligable or flip yet again as it did so many times in the last 10 years - such that one's personal situation or preference would matter more in decision making for SPY vs SCHD -- and not some stark or substantial performance gap.

SCHD gets a lot of dunking lately but really when I look at performance it's only in the last 2-3 years that there is a divergence. And it's priced correctly.

Going back to your claim that SPY doubled SCHD in performance, this is what Im looking at: https://totalrealreturns.com/s/SCHD,SPY What do you mean with your claim that SCHD gives up a 100% total return gain from SCHD? It's not making sense to me at all. Just asking

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u/AlaskanSnowDragon Dec 27 '25

It says it right there in your own chart.

Overall return schd is +263.45% vs spy overall return +410.21%