Overview
- Coverage on June 21 recommends SCHD as a low‑fee, indexed core for dividend income because it follows the Dow Jones U.S. Dividend 100, has a 0.06% expense ratio, and yields roughly 3.2%.
- SCHD’s eligibility rules require at least 10 consecutive years of rising dividends and use a composite score that includes cash‑flow‑to‑debt, return on equity, dividend yield, and five‑year dividend growth to screen for quality.
- VIG focuses on dividend growth and holds a much larger share of information technology stocks, with top holdings such as Broadcom, Apple, and Microsoft, which has supported stronger price gains.
- Large sector weight gaps—for example, information technology about 28.4% in VIG versus 11.1% in SCHD and energy about 16.9% in SCHD versus 3.1% in VIG—explain why the two funds diversify sector and style risk when combined.
- Advisers note that pairing SCHD and VIG gives a simple mix of higher yield and growth exposure while investors seeking still more income can add higher‑yield sleeves but should expect greater volatility, principal risk, and different tax treatment.