FDVV vs SCHD: Comparing Dividend ETFs

This article compares FDVV vs SCHD — the Fidelity High Dividend ETF vs Schwab’s U.S. Dividend Equity ETF. 

Both are passively managed index ETFs popular with dividend investors and retirees looking to earn dividend growth, price appreciation, and solid dividend yields.

Index ETFs track market indexes like the S&P 500. 

FDVV and SCHD are narrower-scoped ETFs that track specific dividend-focused indexes. Each ETF has fewer stock holdings than the S&P 500. 

FDVV tracks the Fidelity High Dividend IndexSM, an index specifically designed for the following investment objective:

To reflect the performance of stocks of large and mid-capitalization dividend-paying companies that are expected to continue to pay and grow their dividends.

SCHD tracks the Dow Jones U.S. Dividend 100™ Index.

Both funds own shares of the largest U.S. dividend-paying companies and pay quarterly dividends.

Bottom Line Upfront (BLUF)

Before I get into the details of FDVV vs SCHD, it’s important to keep the following in mind:

• Both funds are low-cost options for portfolio builders seeking dividend income and total returns. 
• FDVV is substantially smaller as measured by net assets and heavily weighted toward tech growth stocks.
• FDVV has a higher expense ratio by nearly three times. 
• FDVV is poised for higher capital growth (annual appreciation of the dividend payment). SCHD aims for higher yields.
• SCHD tends to outperform in bear markets (see chart below). FDVV outperforms in bull markets. 
• FDVV has slightly edged SCHD total returns (reinvesting dividends) since inception, FDVV thanks to 2023-2024 gains from large growth stocks. Past performance is not indicative of future returns.
• Holding concentration risk affects both ETFs, but differently.  

Retirees and investors seeking current income may prefer SCHD for its higher yield today and high total returns.

Younger investors or those looking for long-term dividend growth, lower taxable income, and higher price appreciation may choose FDVV. 

Please note that both ETFs update their prospectuses regularly. The information referenced in this article will change over time.

The best resource for both funds is the respective company’s websites.

Here are links to the most updated information at Fidelity and Schwab. Consider the information on those pages to be the authoritative data source.

• Fidelity High Dividend ETF (FDVV)
• Schwab’s U.S. Dividend Equity ETF (SCHD)

FDVV vs SCHD Comparison

Side-by-Side

Here’s a side-by-side comparison of both ETFs. Scroll right on mobile.

A few noticeable differences comparing FDVV vs SCHD:

• Both ETFs have concentration risk. The top 10 holdings make up 30% and 40% of the fund, respectively. 
• Though FDVV’s concentration risk appears lower, its top three stocks make up 17% of the fund’s holdings. 
• SCHD’s dividend yield is higher, and its expense ratio is lower.
• FDVV’s smaller size requires a higher expense ratio. 
• FDVV’s three and five-year performance record has substantially outperformed SCHD.
• Outperformance is primarily due to holding low-yield growth stocks, including Nvidia.

Benchmark Indexes

FDVV tracks the Fidelity High Dividend IndexSM.

The Fidelity High Dividend IndexSM selects U.S.-based stocks with relatively high dividend yields, stable cash flows, and strong financial health, aiming for sustainable income generation.

It also considers market capitalization, liquidity, and sector diversification to ensure the portfolio remains balanced and suitable for long-term dividend growth.

SCHD tracks the Dow Jones U.S. Dividend 100™ Index. 

Visit this page for the latest information about the index.

Stocks must pass the following screens to be eligible for inclusion in the index: 

• Minimum 10 consecutive years of dividend payments
• Minimum float-adjusted market capitalization (FMC) of US$ 500 million
• Minimum three-month ADVT of US$ 2 million

Stocks passing all three screens are ranked in descending order by Indicated Annual Dividend (IAD) yield, defined as a stock’s IAD (not including any special dividends) divided by its price. The top half of securities based on this ranking are eligible for stock selection. Excludes REITs.

Performance Chart

The performance chart below is from the FDVV inception date. The long-term returns of both ETFs are similar.

However, FDVV has had stronger three and five-year performance, largely due to the massive growth of Nvidia, which is a top holding. 

The chart shows price performance, excluding the total return accounting for reinvested dividends. 

Scroll right on mobile.

Past performance is not indicative of future results. 

Though FDVV’s price has outperformed over three and five years, SCHD is close, dating back to FDVV’s inception. SCHD performed better in the bearish markets since 2016. 

Either fund is suitable as an income-producing asset in your portfolio. But SCHD is a higher-yielding ETF while FDVV has proven more tax efficient with a lower dividend and greater capital appreciation. 

See the table above for up-to-date three and five-year average annual performance records.

Dividend Payout Schedules

Both FDVV and SCHD pay quarterly dividends. 

Investors receive quarterly dividend payments for both ETFs in March, June, September, and December.

Learn more:

• SCHD ETF dividend history

Top Ten Holdings

Here are the top ten holdings for each index ETF. Visit the links at the beginning of the article for the most updated lists. 

 

Want more holdings? Check out this list of the top 50 SCHD stock holdings. 

Equivalents and Alternatives

Here are the closest mutual fund alternatives for both ETFs. It is best to own these mutual funds if you have an existing account with Fidelity or Schwab.

Otherwise, use the ETFs to avoid unnecessary fees. 

The FDVV mutual fund equivalent is FDGFX, the Fidelity Dividend Growth Fund.

FDGFX is not an exact equivalent because it is a managed mutual fund with an expense ratio of 0.78%. 

FDVV has outperformed FDGFX in the three and five-year periods ending on October 31st, 2024. 

The SCHD Schwab mutual fund equivalent is SWDSX, the Schwab Dividend Equity Fund.

SWDSX is also not an exact equivalent because it is a managed mutual fund with an expense ratio of 0.88%. 

The FDVV mutual fund equivalent is VDADX, the Vanguard Dividend Appreciation Index Fund Admiral Shares.

Investors with an account at Vanguard who prefer mutual funds can consider this fund an equivalent to FDVV. 

SCHD has no mutual fund equivalent. The SWDSX is an expensive, actively managed mutual fund and is not recommended due to the high expense ratio and severe underperformance.

Investors who do not have a Fidelity or Schwab account should use the FDVV and SCHD ETFs to get equivalent exposure at lower minimums and expense ratios.

Vanguard dividend ETF alternatives include VYM and VIG. 

Mutual funds trade differently than ETFs, which trade like stocks. 

ETFs are easier to own, and the price changes throughout the day. Mutual funds only trade at the market close. 

Active investors typically use ETFs for trading purposes or to buy and hold indexes when they can’t access index mutual funds.

The Verdict

Deciding between FDVV and SCHD comes down to higher yield and downside protection in bear markets vs. a balance of dividend stocks and tech growth stocks.

FDVV has a lower dividend yield but higher capital growth thanks to holding stocks like Microsoft, Nvidia, and Apple.

Those three stocks make up more than 17% of the fund’s holdings. So FDVV is, in a way, disguised as a growth ETF. 

That makes it a slightly better option in non-retirement accounts because the lower yield will result in lower taxable distributions. 

FDVV’s price has outperformed SCHD over the past three and five years, but SCHD may be preferred because it is more established, has higher net assets, and performs better in bear markets. 

In retirement accounts, SCHD benefits more from avoiding dividend taxation. In contrast, in a taxable account, investors will be on the hook for higher taxation on the dividends.

Retirees looking for current income in retirement accounts should go with SCHD. However, beware of higher concentration risk. 

That said, SCHD holds mostly established, blue-chip U.S. companies with lower volatility (beta) than the broader market. 

Younger investors looking for some income but lower taxation in taxable accounts and solid long-term total return may prefer FDVV.

FDVV should provide more price appreciation because it pays lower dividends and excludes certain high-yield stocks.

If investors need less current income but want to benefit from stocks with high dividend growth, FDVV is a good choice. 

An inevitable bear market may damage the fund, as high-flying tech stocks are vulnerable to a pullback. 

Purchase either ETF at any commission-free online broker. 

Please comment with your questions regarding FDVV vs SCHD in the comments section below. Include any requests you have about adding more detail to this article. 

Read more:

• SCHD vs VIG
• VYM vs SCHD
• SCHD vs JEPI

Disclosure: The author is long SCHD.