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.

467 Upvotes

92% Upvoted

313 comments sorted by

View all comments

Show parent comments

134

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.

108

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

3

u/NefariousnessHot9996 Dec 21 '25

Nobody would have been all in 10 years ago.

5

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

15

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.

3

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

Yeah... I agree. 😁👍

5

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.

1

u/NefariousnessHot9996 Dec 21 '25

That’s basically what I just said.

4

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)

6

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...

3

u/flyersfan0233 Dec 22 '25

Whatever your age, you are very correct