Schwab U.S. Dividend Quality ETF (SCHD) Offers Higher Yield While Fidelity High Dividend ETF (FDVV) Leans Into Tech

FDVV vs. SCHD: Higher Yield and Lower Fees or Tech Tilt?

Fidelity High Dividend ETF (FDVV 0.05%) and Schwab U.S. Dividend Equity ETF (SCHD 0.44%) both target U.S. companies with attractive dividend profiles, but their approaches and makeup differ.

This comparison highlights their cost, performance, sector exposures, and structural details to help clarify which may better fit a given dividend-focused strategy.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; figures are based on daily returns.

SCHD is more affordable, with an expense ratio just 0.06% compared to FDVV’s 0.16%.

Performance & risk comparison

What’s inside

Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index and holds 103 companies, focusing on Energy (20%), Consumer Defensive (19%), and Healthcare (16%).

Its holdings include AbbVie (ABBV 0.21%), Cisco Systems (CSCO +1.78%), and Merck & Co. (MRK 1.10%). The fund has a 14.0-year track record.

Fidelity High Dividend ETF, by contrast, leans more into Technology (25%), Financial Services (19%), and Consumer Defensive (13%).

Its top holdings are NVIDIA (NVDA +4.98%), Microsoft (MSFT +2.06%), and Apple (AAPL +0.14%).

For more guidance on ETF investing, check out the full guide at this link.

Foolish take

Over the last decade, the Fidelity High Dividend ETF has generated total returns of 13% annually, while the Schwab U.S. Dividend Equity ETF produced 11% growth.

While these both slightly trailed the S&P 500’s mark of 14% over the same time, I’d argue their results are impressive considering both ETFs focus on dividend stocks, which typically have slower growth. Furthermore, these annualized returns are well above the market’s uber-long-term average of around 10%.

I wouldn’t argue that one ETF is markedly better than the other, as they each offer hefty dividend yields, low expense ratios, below-market betas, and are issued by top-tier financial firms.

However, if an investor already has exposure to the S&P 500 — and therefore a higher level of indirect exposure to the Magnificent Seven — buying FDVV may not be the right move. Its three biggest holdings are members of the Magnificent Seven club and account for nearly 18% of the fund’s assets.

Meanwhile, SCHD has more exposure to the energy, consumer defensive, and healthcare sectors, making most of its holdings non-discretionary and home to essential products or services.

Personally, I already have plenty of exposure to the technology sector and the Magnificent Seven as a whole, so if I were to pick between the two, I’d go with SCHD and its higher dividend yield and more defensive holdings, which I don’t have as much of.

Glossary

ETF (Exchange-Traded Fund): An investment fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Dividend yield: The annual dividend income expressed as a percentage of the investment’s current price.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover its operating costs.
Beta: A measure of a fund’s volatility relative to the overall market; values above 1 indicate higher volatility.
AUM (Assets Under Management): The total market value of assets that a fund manages on behalf of investors.
Max drawdown: The largest observed percentage drop from a fund’s peak value to its lowest point over a specific period.
Sector tilt: When a fund allocates more of its assets to certain industry sectors compared to a benchmark.
Consumer Defensive: Companies that produce essential goods like food, beverages, and household products, often resilient during economic downturns.
Growth of $1,000: The increase in value of a $1,000 investment over a specified period, reflecting total returns.
Index (in ETF context): A benchmark representing a group of securities that a fund may track or replicate.