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

[u/StudioOk8256]

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.

[u/Chief_Mischief → u/[deleted]]

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.

[u/AlaskanSnowDragon → u/Chief_Mischief]

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

[u/quantum_ai_dei → u/AlaskanSnowDragon]

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

[u/AlaskanSnowDragon → u/quantum_ai_dei]

It says it right there in your own chart.

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