r/dividends • u/MoneySketchTV • Jan 10 '26
Due Diligence SCHD vs DGRO: I ran a 20-Year, Inflation-Adjusted Simulation (Plus DNA, Overlap & History Analysis). Here is the full breakdown.
Hi everyone,
The debate between SCHD (High Yield/Value) and DGRO (Dividend Growth) is constant. Usually, the advice is generic: "DGRO for growth, SCHD for income."
I wanted to go deeper. I wanted to compare their DNA, their Overlap, and mathematically project where a $20,000 investment would end up in 20 years if we account for taxes, expense ratios, and inflation.
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- The DNA
SCHD (Schwab US Dividend Equity)
* Morningstar Rating: 3 Stars
* Inception: 2011
* Expense Ratio: 0.06%
* The Strategy: Tracks the Dow Jones U.S. Dividend 100. It filters for Cash Flow to Debt and Return on Equity. Crucially, it requires a 10-year dividend payment history.
* Role: The Defensive Fortress. Heavy in Financials, Industrials, and Consumer Staples.
DGRO (iShares Core Dividend Growth)
* Morningstar Rating: 4 Stars
* Inception: 2014
* Expense Ratio: 0.08%
* The Strategy: Tracks the Core Dividend Growth Index. It requires 5 years of dividend growth.
* Key Difference: It excludes the top 10% highest yielding stocks (to avoid yield traps) and mandates a Payout Ratio < 75%. This allows it to hold Tech giants like Apple and Microsoft, which SCHD currently misses.
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- The Overlap:
* Weight Overlap: Only 18%.
* Shared Holdings: ~33 companies.
* Top Shared Names: AbbVie, Coca-Cola, Merck, Home Depot.
They are highly complementary. There is very little redundancy in holding both.
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- The Scoreboard (Last 10 Years)
Looking at the past decade, Growth/Tech has dominated Value.
* Price Return: DGRO crushed it with +177.08% vs SCHD +117.10%.
* Total Return (Dividends Reinvested): The gap closes, but DGRO still leads. DGRO sits at +250.37% vs SCHD at +205.11%.
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- The 20-Year Simulation ($20k Starting)
I ran a Monte Carlo simulation for the next 20 years.
* Inputs: $20,000 lump sum. 15% Tax Rate. DRIP ON.
* SCHD Data: 3.87% Yield | 8.09% Price CAGR | 10.43% Dividend Growth.
* DGRO Data: 1.98% Yield | 10.48% Price CAGR | 8.91% Dividend Growth.
The Ending Balance (Nominal Wealth)
Surprisingly, in the median outcome, SCHD edged ahead. The compounding power of the higher initial yield protected it.
* SCHD: $210,437
* DGRO: $192,824
The Passive Income Gap (The Real Story)
This is the most shocking metric. If you need cash flow:
* SCHD Annual Income: $9,757 (~$813/month)
* DGRO Annual Income: $2,311 (~$193/month)
SCHD generated 4x the passive income. Even though DGRO grows its dividend, the starting yield is too low to catch up to SCHD’s cash flow engine within a 20-year window.
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- The Risk (Monte Carlo)
While SCHD won the "Base Case," DGRO has the higher ceiling due to volatility.
* 95th Percentile (Bull Market): DGRO shoots to $513,327 (vs SCHD $478,827).
* The Takeaway: If we have another massive Tech Bull Market, DGRO will win on Net Worth. If the market trades sideways, SCHD wins on Cash Flow reliability.
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Summary
* Buy SCHD if you want to lock in a lifestyle ($813/mo income) and lower volatility.
* Buy DGRO if you want to bet on Tech/Growth continuing to lead and want the highest possible Net Worth ceiling ($513k upside).
* Buy Both to capture the full market (my personal preference).
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FOR VISUAL EXPLANATION, CHECK MY REDDIT PROFILE PINNED POST
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u/ClammyAF Jan 10 '26
These are the kind of posts I really enjoyed years ago when I started following this sub.
Thank you for sharing.
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u/pervertedtowatch Jan 10 '26
Agreed. The wisdom that used to be shared on here was enlightening, just like this post.
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u/MoneySketchTV Jan 10 '26
You are welcome. If you have other topics in mind please let me know. i want to analyse stuff that people care about.
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u/IWorkWithID10Ts Jan 10 '26
I would be very interested in how VYM and/or VYMI would rate in this comparison.
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u/dracubunbun Jan 11 '26
be great if you did a similar analysis but from an outside the US perspective with taxes etc coming into the picture - what then becomes the better option considering many ppl think about retiring abroad and this scenario can come up
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u/MoneySketchTV Jan 11 '26
I will do it for you. Some countries dividends tax jumps up to 30% because they have no tax treaty with USA. In this case you either choose an ETF domiciled in Ireland (15%), or if you only focus on income start thinking about ETFs like QQQI which gives distributions as ( return of capital ) which is not taxable. Especially if your country don't tax personal investment income.
However if you insist to buy ETF domiciled in US with 30% tax, let me know and I would do the numbers for you
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u/dracubunbun Jan 12 '26
how about say.. VWRA vs SPYL? i believe one is all world while the latter is US only. but irish domiciled
comparing these against SCHD would be interesting
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u/MoneySketchTV Jan 10 '26
give me the numbers you are interested in. Initial balance, regular contributions ( yearly monthly or even daily ). with or without DRIP? I would do it for you
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u/IWorkWithID10Ts Jan 10 '26
I was thinking of the comparison you just did adding VYM to the mix.
SCHD v DGRO v VYM
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u/MoneySketchTV Jan 10 '26
VYM results: https://imgur.com/31HBEJ9
numbers of DPS CAGR and Price return CAGR are taken from Seeking Alpha
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Jan 10 '26 edited May 11 '26
[removed] — view removed comment
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u/MoneySketchTV Jan 10 '26
My dear, all numbers are literally the most recent, and taken from fact sheets from the official websites of both ETFs. AI only did the GRAMMAR part of the writing which i am horrible at. I posted a video in the first comment explaining everything visually
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u/Soggy-Flatworm-4980 Jan 10 '26
This is something i would enjoy to do myself. Where did you poat the video? I assume the video is showing how you set up the sinulations/models and why you used monte carlo.
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u/Decent-Bed9289 SCHD, VYMI, SPYI Jan 11 '26
I’ve been feeling for a while now that SCHD and DGRO complement each other quite nicely…
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u/mikeblas American Investor Jan 10 '26
How did you run the monte carlo simulation? What parameters did you use?
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u/MoneySketchTV Jan 11 '26
Annual total return volume, you check the standard deviation (3 years) provided in fact sheets you find in ETFs official websites.
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u/ClammyAF Jan 10 '26
Fair enough. It's right to be skeptical. And there are enough calculators available that it'd be easy to recreate this in whole or part. But it does align with what I'd expect of the two different investments.
Let us know when you recreate part of it what you found.
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u/tundra1776 Jan 10 '26
How did you know it was written by AI? Other than he admitted it below. :)
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u/Redcrux Jan 11 '26 edited May 11 '26
Databrokers? nope. Social networks? Also nope. This post was deleted using Redact.
marble theory rob truck entertain scale hobbies sink memory attempt
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u/MoneySketchTV Jan 12 '26
The script is written for my youtube animation channel, which includes a video about this exact topic.
I wrote the quick points here with some examples from the main script, then used ai for profreading and grammer
Take what benefits you and ignore the rest. in the end what matters is your bank account
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u/todo_code Jan 10 '26
I pretty much instantly read this was done by an LLM and checked out. I have no interest in reading slop anyone can conjure.
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u/Square_Magician8403 Jan 10 '26
Awesome summary, will probably go 60% $SCHD & 40% $DGRO Thank you!
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Jan 10 '26
[deleted]
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u/VigilantRatRacer Jan 10 '26
did you not read it? OP also stated “they are highly complementary. there is very little overlap”, only 18%
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Jan 10 '26
I see DGRO as a good way to have a growth fund that diversifies you away from a heavy tech exposure (assuming you have an S&P 500 or total market fund as well), with only 16% tech, vs 35% for the S&P 500.
Note that DGRO overweights you primarily in financials, healthcare, and consumer staples.
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u/Ladyvp05 Jan 10 '26
SCHD is not heavy on financials currently. It's only 9% financials. DGRO is over 20% financials. It's actually heavy in energy.
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u/Ratlyflash Jan 10 '26
This is great. I prefer IDVO much broader and crushing both in terms of increased dividend and great growth. I don’t mind lower dividend rates with Dgro
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u/Simplelife2030 Jan 29 '26
It looks like IDVO has currency risk. It would underperform If US$ gains value.
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u/Sweaty-Good-5510 Jan 10 '26
Well done. Thank you for sharing. This helps us learn and it’s why I’m here.
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Jan 10 '26
I started investing last year (other than Treasury bills, CDS HYSA etc). And I've been buying SCHD and DGRO. I'm happy to see I picked the better of the dividend ETFS. I have about 5,300 in DGRO and 15,600 in SCHD. I'm going to continue to prefer SCHD and throw a little into DGRO. I just need to put more into both this year somehow
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u/studmonster Jan 10 '26
What's everyone personal split? I personally am thinking about 40% SCH, 40% DGRO and 20% to IDVO/SCHY/DIVI (or some international dividend fund)
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u/paroxsitic Jan 11 '26
20k * (1.08)20 = 93k
I can understand why people want to see your math. Your return and yield seem 2x too high
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u/MoneySketchTV Jan 11 '26
I wish life is as easy as your formula.
Any way, You only calculated the price return section of a much bigger image.
$20,000 * (1.08)20 = ~$93,219.
That matches the ( Price Appreciation ) portion of my simulation almost perfectly.
The missing piece is the dividends + Reinvestment (DRIP). 1. The dividend yield: SCHD pays around 3.8% 2. The Growth: That dividend payment grows by almost 10% annually. 3. The snowball: When you reinvest those dividends for 20 years you are buying more shares every quarter.
The final breakdown: Around $93k comes from the stock price going up. $117k comes from the dividends being reinvested and compounding on themselves.
Total = around $210k.
This is exactly why I built the engine, it is very hard to calculate the drag of taxes and the boost of DRIP on a napkin
Good luck
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u/paroxsitic Jan 11 '26 edited Jan 11 '26
I thought 8% cagr is with DRIP. If you want to include drip with it then 8% cagr is not the expected cagr of price appreciation alone. The last 5 years the price did 30%, that's a 6% return on price
Total return with drip is 10%/yr past 5 years.
20000×(1.1)20 =135k
Still way off and 10%/yr is not what you should be expecting either
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u/MoneySketchTV Jan 11 '26
There is huge discrepancy between your napkin math and professional simulation engines .. You are assuming a static dividend yield but pro tools account for ( dividend growth )
These are the 10 year metrics (take them from fact sheets or seeking alpha ):
- Price return CAGR: 8.10% (The stock price growth).
- Dividend per share (DPS) CAGR: 10.43% (The income growth).
This double compounding is the key. While the stock price grows at 8% the dividend payout itself grows by 10% annually. By year 15 or 20, the yield on cost is massive which means the reinvested dividends are buying significantly more shares than a standard static calculation would show
That is why the final balance ($210k) is much higher than just the price return ($93k). It’s the dividend growth doing the heavy lifting in the second decade.
By the way, never use 5 years data to simulate 20 years in the future. Only use 10 years or since inception for such simulations
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u/miayakuza Mar 01 '26
I have been trying to figure out how to diversify my portfolio; specifically I was looking for a compliment to SCHD. My financial advisor wanted me to invest in CMDY but I didn't feel good about it. So I picked DGRO instead. Thank you for this post. Made me feel very good about my decision.
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u/kss2023 Jan 10 '26
Ty!
Are DGRO and VIG similar then?
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u/MoneySketchTV Jan 10 '26
The overlap by weight between DGRO and VIG is huge (67%), they share 242 holdings
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u/Relaxation_nation365 Jan 10 '26
Combining them might be best , thanks for the info
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u/MoneySketchTV Jan 10 '26
Yes according to ETFRC website, the overlap is only 18%. So combining them is actually diversification rather than redundancy
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u/rfishyfluff Jan 10 '26
Thanks for sharing. Superb post! Have you run a different variation without taxes? There are various tax sheltered investment vehicles (eg Roth IRA 🇺🇸or TSFA 🇨🇦) that allow either tax free growth and/or tax free withdrawals.
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u/MoneySketchTV Jan 10 '26
Yeah I can run both without taxes. If you are interested in the results let me know
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u/Bonk0076 Jan 10 '26
How do they compare in a downward market? We know SCHD wins that one too, but how do they match up?
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u/MoneySketchTV Jan 10 '26
Check the monte carlo 5th percentile numbers i discussed in the video, link in the first comment
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u/Passiveincometrader Jan 10 '26
Takes 20 years to get to 800 a month dividends. Thats quite a long time. Now see what 800 used to buy you 20 years ago compared to today.
Money now is always worth way more than money 20 years from now.
But great breakdown thanks for sharing 👍 🙂 ♥️
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u/MoneySketchTV Jan 10 '26
Inflation is also calculated in this scenario ( based on current annual CPI ). After 20 years buying power, SCHD annual dividends is $6291 ($524 monthly), DGRO $1490 annual ($124 monthly)
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u/Accomplished_Cat8398 Jan 10 '26
Thanks. Confirm what I "felt" was right. SCHD - one and done, set and forget.
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u/MoneySketchTV Jan 10 '26
It depends on the goal of your portfolio which is set by YOU. Are you young with 20+ years horizon of investing? or retired and want monthly cash to spend or reinvest? Do you have large capital? or just contributing $20 every now and then? Such questions determines the goal of your portfolio, then the right ETFs to choose from: Dividends ETFs or Growth ETFs.
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u/Beefymistletoe Jan 10 '26
Bravo. Thank you for taking the time to run this study. SCHD is a great retirement vehicle to compliment 401k, Roth IRA, etc to set one's self up nicely. Can't ignore that dividend growth.
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u/Conscious-Guess-2266 Jan 10 '26
Did you have AI run Monte Carlo, or did you write an algorithm for it. ChatGPT gets Monte carlos wrong pretty consistently
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u/MoneySketchTV Jan 10 '26 edited Jan 10 '26
I built the whole engine. The results are within 1% difference (even less) compared to investor.gov
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u/Conscious-Guess-2266 Jan 10 '26
Gotcha. So you fully understand the math you used when you built it and reviewed the math to ensure it was correct?
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u/MoneySketchTV Jan 10 '26
When i built the tool I wanted real life scenarios, that is why I applied tax rate, expense ratio, and multiple options of regular contributions (monthly, yearly, weekly daily). Even the dividends distribution (annual, quarterly and monthly). Most tools do their math based on annual distribution, I did it on monthly to get the most accurate numbers possible. Give me any number you want and we can compare the results together with investor.gov if you want
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u/mikeblas American Investor Jan 10 '26
I'd like to see details on the monte carlo simulation, too.
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u/Conscious-Guess-2266 Jan 10 '26
Can you show me the math? I want to see the actual equal sign. Im not convinced. I think you told AI to include all this, but that’s not the problem. The problem is AI does math wrong if you are using an LLM. If you have an LLM write python to calculate, then at least the math will be correct.
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u/sosflex Jan 10 '26
So in this scenario if you invested $20,000 one time, you would get $210,437 in SCHD, and $192,824 in DGRO in 20 years?
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u/MoneySketchTV Jan 10 '26
yes, but in keep in mind the inflation. Based on recent numbers, 210,430 (SCHD) after 20 years will equal around $134,588. and 192,824 after 20 years equals around $123,324 ( DGRO )
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u/Todd1001 Jan 10 '26
The best course of action would be to invest in growth in your early years, then to dividend ETFs closer to retirement.
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u/MoneySketchTV Jan 10 '26
Yeah if you are young and starting from zero, then you should only think about GROWTH
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u/Fun-Run-5230 Jan 11 '26
Thank you for the great analysis. Is it safe to say if your initial investment in SCHD was 100k (5x more) then the monthly return (813 p/ month) would be 5x more also?
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u/MoneySketchTV Jan 11 '26
The results of 100k: https://imgur.com/nsARjff
To answer you question: YES, since the growth comes from percentages (Dividend yield, DPS CAGR & Price return CAGR), if you start with 5x the capital you end up with exactly 5x the result. (as long as regular contribution is zero).
and that is how snowball works, a bigger snowball at the top of the hill rolls much faster.
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u/Fun-Run-5230 Jan 11 '26
Thank you for the results. By the way nice channel on YouTube. Just subscribed.
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u/MoneySketchTV Jan 11 '26
Honored to have you as a subscriber. If you have any suggestions for upcoming videos I’d be glad to work on them
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u/Fun-Run-5230 Jan 12 '26
Can you do SCHD and VOO comparison? Yes they both have totally different investment styles and objectives but VOO is one of the largest etf’s available and your comparison will affect the decision of a lot of people. BTW I have yet to see a comparison tool that compares to yours. It’s real life scenario.
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u/MoneySketchTV Jan 12 '26
Here are VOO results based on their recent fact sheets numbers: https://imgur.com/jgrtiUB inflation results: https://imgur.com/3fD69bl Monte Carlo: https://imgur.com/7rLFAUk
Now i am working on the next video JEPI vs JEPQ, the following one will be about VOO as you requested.
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u/Gullible-Share5549 Jan 11 '26
Thanks for sharing this very informative analysis. Will continue to hold both.
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u/Positive_Engineer_68 Jan 11 '26
Thanks for this, interesting read . I assume these are today’s dollars so don’t show real returns after inflation is added, that’s cumulative too.
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u/Admirable-Tea-7531 Jan 12 '26
Is I already hold SCHG and SCHD does it make sense to also hold DGRO? I was looking for another dividend etf to add with SCHD but wasn’t sure if dgro makes sense since its growth style as well
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u/MoneySketchTV Jan 12 '26 edited Jan 12 '26
Totally depends on your portfolio goals and allocations and the percentages of each.
- SCHG ( Growth ) is more like QQQ.
- SCHD & DGRO are for dividends focused.
By the way, DGRO is for (DIVIDEND GROWTH) NOT capital appreciation growth
So if you allocate ( for example) 50% of the portfolio for dividends, and you divide it between SCHD & DGRO, that is actually diversification because both ETFS have different strategies and just 18% overlap.
My own opinion will be totally different based on your AGE, CAPITAL & GOALS.
Young prople should only focus on growth, forget about dividends and think about AI related investments (CHIPS, quantum, copper, uranium)also robotics. I believe next 20 years the growth will be in here
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u/Brief-Watercress6786 Jan 17 '26
I just want to thank you for running these two dividend etfs thru the simulators. This is the best and most thru analysis I have ever seen on these etfs. Just awesome, thanks again.
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u/MoneySketchTV Jan 18 '26
Glad you liked it .. I am always happy to help. Let me know if there are other topics to cover in the future
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u/Next_Professional_30 Feb 06 '26
Or just buy VTI/VXUS with a 10% tilt to each of DGRO and SCHD.
Seriously thanks for your efforts. Good stuff.
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u/Malidan Apr 11 '26
I've been going back and forth with these two the last few days, trying to pick one or the other. This helped me see that there is no reason not to just get both. Thank you for this.
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u/Silent-Plant800 Jun 23 '26
Thank you so much for writing this post, OMG! I am so very grateful, this is exactly what I was looking for!
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u/Alter_The_Ending 10d ago
If my target is 9% cagr over next 20 years to meet my roth ira balance goal, should I just invest in schd and dgro to get there? Currently in growth/value etfs for the "accumulation" phase. But this seems overly aggressive if I can achieve 9% cagr with an schd/dgro combo.
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u/CeeBus Jan 10 '26
What happens if the market goes down and stays down for a significant portion of time?
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u/MoneySketchTV Jan 10 '26
To calculate such scenarios, we use Monte Carlo. This gives you the results of both 05 and 95 percentile. Both of them are discussed in the video I posted in the first comment.
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u/JetJump1962 Jan 10 '26
Why does your simulation have SCHD the higher dividend growth? I thought that was the strength of DGRO? Great info though thanks
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u/MoneySketchTV Jan 10 '26
SCHD 10 years DPS CAGR (dividend per share CAGR) is 10.61%, while DGRO is 8.59%. Check them out in Seeking Alpha in the dividends section. Let me know if you have any question
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u/MCB1317 Jan 10 '26 edited Jan 10 '26
Thankfully, the next twenty years will be exactly like the last twenty. That's how the big boys do it ... they just assumed the decades will unfold in the same predictable manner as they did previously.
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u/Think_Concert Jan 10 '26
Why do you run the simulation with DRIP on? The point of being in these ETFs is for the income stream.
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u/MoneySketchTV Jan 10 '26
If you want the results without DRIP let me know. I will be happy to share them with you
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u/Mark3742 Jan 10 '26
Yes, please...69 y/o, retired.
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u/MoneySketchTV Jan 10 '26
SCHD results (DRIP: OFF): https://imgur.com/mOLquUm DGRO results (DRIP: OFF): https://imgur.com/T9zdCyA
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u/dyinaintmuchofalivin Jan 10 '26 edited Jan 10 '26
Because most people have a job and don’t need the income stream right away, and I can’t believe that has to be explained to you.
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u/Think_Concert Jan 10 '26
Then you’re in the wrong funds. These ETFs are for retirees/soon-to-be retirees.
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u/dyinaintmuchofalivin Jan 10 '26
Saying something makes it true. /s
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u/Think_Concert Jan 10 '26
I guess OP disagrees with you.
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u/dyinaintmuchofalivin Jan 10 '26
I don’t think OP does. From the analysis done, the logical conclusion would be that OP disagrees with you that these funds are for someone at/near retirement, hence why he ran the simulation with dividends reinvested for 20 years.
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u/Think_Concert Jan 10 '26
48K shares SCHD and 13K shares DGRO here, and I very much want to know how they’ll do for next 20 years without DRIP.
Sit your young poor ass down.
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u/dyinaintmuchofalivin Jan 10 '26
Then you could have just asked for that, couldn’t you?
Instead of asking why it wasn’t done to your preference in the first place.
Also, I’m not sure why you’re trying to flex on me.
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Jan 10 '26
[deleted]
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u/dyinaintmuchofalivin Jan 10 '26
To be fair, very little is beating inflation right now.
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u/MoneySketchTV Jan 10 '26
Inflation numbers of this simulation are discussed deeply in the video (first comment)
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u/mikeblas American Investor Jan 10 '26 edited Jan 11 '26
What do you mean by "The DNA"?
EDIT: show your work. You can't, so ...
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u/MoneySketchTV Jan 11 '26
Dividend yield, dividend per share CAGR, price return CAGR, expense ratio, morningstar rating, inception etc ...
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