SPY vs SCHD
S&P 500 (SPY) vs US Dividend Equity (SCHD) — Market benchmark or income machine?
Understanding SPY and SCHD
SPY (SPDR S&P 500 ETF Trust) is the original S&P 500 ETF (since 1993), tracking 500 of the largest US companies. It's the most traded ETF in the world with unmatched liquidity. SPY offers broad market exposure with a 0.09% expense ratio and ~1.3% dividend yield.
SCHD (Schwab US Dividend Equity ETF) is Schwab's dividend-focused ETF, selecting ~100 stocks based on dividend consistency (10+ year track record), yield, and financial health. With ~3.5% yield and strong dividend growth (~12% annually), SCHD appeals to income-focused investors.
SPY gives you the full market; SCHD gives you the best dividend payers within it. There's significant overlap — many SCHD holdings are also in SPY — but the weighting is completely different. SPY is 30% tech (growth); SCHD overweights financials and industrials (value/income). SPY wins on total return in bull markets; SCHD holds up better in downturns.
SPY vs SCHD: The Numbers
Compare SPY and SCHD across key metrics that matter to long-term investors: expense ratios, historical returns, volatility, and maximum drawdown. The "Winner" column highlights which ETF performs better on each metric.
| Metric | SPY | SCHD | Winner |
|---|---|---|---|
| Expense Ratio | 0.09% | 0.06% | SCHD |
| Total Assets | $698.3B | $85.9B | SPY |
| Number of Holdings | ~500 | ~100 | SPY |
| 1 Year Return | +19.41% | +13.48% | SPY |
| 5 Year Return | +78.46% | +50.14% | SPY |
| 10 Year Return | +278.41% | +219.40% | SPY |
| Volatility (3Y) | 11.6% | 13.5% | SPY |
| Max Drawdown | -50.8% | -21.5% | SCHD |
| Current Price | $662.29 | N/A | — |
Bull Markets vs Bear Markets: Who Wins When?
Bull Markets (2019-2021, 2023)
SPY typically outperforms because tech and growth stocks lead the charge. SCHD's dividend stocks lag when investors chase growth — momentum favors SPY's heavier tech weighting (30% vs SCHD's ~5%).
Bear Markets (2022)
SCHD tends to fall less. Dividend stocks are usually profitable, established companies with lower valuations. In 2022, SCHD fell ~5% while SPY fell ~18%. The income floor provides psychological and financial cushion.
Recovery Periods
SPY bounces back faster — tech rebounds hard when sentiment shifts. SCHD's dividends provide a floor — you still get paid 3.5% while waiting for prices to recover.
Takeaway: SPY has higher highs and lower lows. SCHD is the smoother ride with cash flow along the way. Your choice depends on whether you prioritize maximum growth or sleeping well at night.
The Income Gap: What $100,000 Pays You
The biggest practical difference between SPY and SCHD is cash flow. Here's what a $100,000 investment generates in annual dividend income:
That's nearly 3x more income from SCHD. For a retiree withdrawing 4% per year, SCHD's dividends cover most of the withdrawal — SPY's dividends cover less than a third.
But total return matters too: SPY's broader diversification and tech exposure have historically delivered higher total returns. The question is whether you need income now or maximum growth for later.
Growth of $10,000
The table below shows what $10,000 invested at different points in time would be worth today. The chart visualizes long-term growth starting from the same inception date for both ETFs.
Monthly Returns Comparison
These heatmaps reveal the month-by-month performance patterns of each ETF. Green indicates positive returns, red indicates negative returns, with darker colors showing larger moves. Use these to identify volatility patterns — notice how SPY and SCHD often move together, but SCHD's moves tend to be more moderate.
SPY Monthly Returns
SCHD Monthly Returns
Key Differences: Market Benchmark vs Dividend Quality
SPY (S&P 500)
- • 500 companies, all sectors represented
- • The market benchmark — what all funds are measured against
- • ~1.3% dividend yield
- • 30% tech exposure drives growth
- • Higher volatility, higher total return potential
SCHD (Schwab US Dividend Equity)
- • ~100 dividend-quality companies
- • Screens for financial strength and 10+ year dividend history
- • ~3.5% dividend yield
- • Financials and industrials heavy
- • Lower volatility, steady income stream
The Bottom Line
Choose SPY for maximum total return and if you don't need income now. Choose SCHD for reliable dividends and lower drawdowns. For many investors, a 60/40 or 70/30 split (SPY/SCHD) captures both growth and income — giving you the market's upside with a dividend cushion.
Frequently Asked Questions
Is SPY or SCHD better for retirement?
It depends on your retirement timeline. SPY is better for accumulation (higher total returns over long periods), while SCHD is better for income during retirement (3.5% yield covers withdrawals). Many retirees use both — SPY for growth and SCHD for income.
What is the dividend yield of SPY vs SCHD?
SPY yields approximately 1.3%, while SCHD yields approximately 3.5%. SCHD pays nearly 3x more in dividends, making it the clear choice for income-focused investors.
Does SPY or SCHD have better total returns?
Over the past 5 years, SPY returned +78.46% compared to SCHD's +50.14%. SPY tends to outperform in bull markets due to its tech exposure, while SCHD holds up better in downturns.
Should I hold both SPY and SCHD?
Yes, holding both is a popular strategy. SPY gives you full market exposure while SCHD tilts toward dividend quality. A 60/40 or 70/30 split (SPY/SCHD) captures both growth and income, though there is some overlap since many SCHD holdings are also in SPY.
SPY Alternatives & Dividend ETF Alternatives
SPY and SCHD aren't the only options. Here are alternative ETFs that offer similar exposure:
S&P 500 Alternatives
- VOO — Vanguard S&P 500 ETF. Same index as SPY but with a lower expense ratio (0.03% vs 0.09%). Best for buy-and-hold investors.
- SPLG — SPDR Portfolio S&P 500 ETF. State Street's low-cost alternative to SPY at just 0.02% expense ratio.
- IVV — iShares Core S&P 500 ETF. BlackRock's version at 0.03% expense ratio. Functionally identical to VOO.
Dividend ETF Alternatives
- VYM — Vanguard High Dividend Yield ETF. ~400 stocks, more diversified than SCHD with a similar yield.
- DVY — iShares Select Dividend ETF. Higher yield focus, ~100 dividend stocks with an income-first approach.
- HDV — iShares Core High Dividend ETF. Concentrated portfolio of ~75 high-dividend stocks focused on quality.
- DGRO — iShares Core Dividend Growth ETF. Focuses on dividend growth potential rather than just current yield.
More SPY & SCHD Comparisons
Last updated: 3/15/2026