SPHD vs SCHD: The Complete Comparison Guide

SPHD and SCHD are both dividend funds; here we highlight the key differences.

kent
|
Research Lead
Reviewed by: Lisa Barr
,
Edited by: Lisa Barr

Investors considering an investment in dividend ETFs may be interested in comparing SPHD versus SCHD to determine which is best for their needs. While these two funds have similarities, there are some key differences that investors should consider before deciding which dividend ETF to buy.  

Dividend ETFs: The Basics on SPHD vs SCHD  

SPHD and SCHD are both exchange-traded funds that focus on dividend stocks. However, there are a few key differences for investors to keep in mind. For example, SPHD focuses on low volatility stocks with high dividend yields, while SCHD focuses on stocks of companies with a track record of consistent dividend payments.  

What Is SPHD?  

The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) is an exchange-traded fund that aims to track the performance of the S&P 500 Low Volatility High Dividend Index. This index consists of 50 stocks from the S&P 500 index that have historically provided high dividend yields and lower volatility compared to other stocks in the S&P 500. 

SPHD employs a rules-based methodology to select and weight its holdings based on dividend yield, with the intention of providing income-oriented investors with a combination of high dividend payments and potentially lower risk compared to the broader market. 

What Is SCHD?  

The Schwab U.S. Dividend Equity ETF (SCHD) is an ETF offered by Charles Schwab. SCHD seeks to track the performance of the Dow Jones U.S. Dividend 100 Index, which is composed of U.S. stocks that have a track record of consistently paying dividends.  

SCHD invests in high quality, large cap stocks that have demonstrated the ability to sustain and grow their dividends over time. The index methodology considers various factors such as dividend yield, dividend growth and dividend payout ratio in the selection and weighting of its constituents. 

SPHD vs SCHD: Side-by-Side Comparison  

Here are the key metrics for comparing SPHD and SCHD with data as of May 31, 2023:  

Metric

SPHD

SCHD

AUM

$3.26B

$45.58B

Yield

4.97%

3.77%

Expense Ratio

0.30%

0.06%

1-yr return

-14.19%

-8.15%

3-yr return

10.09%

13.61%

5-yr return

3.85%

10.75%

10-yr return

7.82%

11.05%

SPHD vs SCHD: Key Takeaways   

For a quick overview of the SPHD versus SCHD comparison, here are the key takeaways: 

  • AUM: SPHD is a smaller fund, with $3.26 billion in assets, compared to $46.58 billion for SCHD. However, both are large enough to ensure significant liquidity and economies of scale that many ETF investors are seeking.  
  • Expense ratio: SPHD's focused indexing methodology makes it more expensive, at a 0.30% expense ratio, compared to SCHD’s 0.06% expense ratio. 
  • Yield: SPHD’s 30-day SEC yield of 4.97% beats that of SCHD’s 3.77% yield.  
  • Performance: SCHD outperforms SPHD in both the short term and the long run.  

SPHD vs SCHD: Performance Comparison  

While SPHD offers investors a higher yield than that of SCHD, the returns for SPHD are consistently lower than SCHD. This difference in return remains consistent with similar fund comparisons, as high- yielding stocks typically underperform lower-yielding, high quality stocks that tend to produce more stable returns over time. 

SPHD vs SCHD: The Differences   

SPHD and SCHD are both popular ETFs that focus on dividend-paying stocks. While they have similar objectives, these dividend ETFs have a few key differences, such as index, composition and long-term performance.  

The main differences between SPHD and SCHD include: 

The SPHD ETF and the SCHD ETF are both dividend-focused exchange-traded funds, but they have some key differences: 

  • Index and investment focus: The SPHD ETF tracks the S&P 500 Low Volatility High Dividend Index, which selects stocks from the S&P 500 index based on their dividend yield and historical volatility. However, the SCHD ETF tracks the Dow Jones U.S. Dividend 100 Index, which focuses on high quality, large cap U.S. companies with a history of consistent dividend payments. 
  • Portfolio composition: Due to their differing index methodologies, the two ETFs hold different portfolios. SPHD typically holds a concentrated portfolio of 50 stocks selected from the S&P 500, while SCHD holds a broader portfolio of 100 high-dividend-yielding stocks from across the U.S. market. 
  • Sector exposure: The sector exposure of the two ETFs may also differ. Depending on the underlying index and stock selection criteria, the SPHD ETF may have a bias toward sectors with high dividends and low volatility, such as utilities, real estate and consumer staples. SCHD aims for sector diversification, but specific sector weightings may vary over time. 
  • Expense ratios: Expense ratios represent the fees charged by the fund manager for managing the ETF. SPHD has an expense ratio of 0.30%, while SCHD has a slightly lower expense ratio of 0.06%. 
  • Yields: SPHD has a higher yield of 4.97%, while SCHD has a lower but respectable yield of 3.77%. This difference is by design, as SPHD focuses on high-yielding dividend stocks, while SPHD focuses on companies with a history of paying dividends. 
  • Performance: Investors seeking SPHD’s higher yields will need to accept the potential for lower returns, as SCHD outperforms SPHD for periods of one year and longer. 

SPHD vs SCHD: The Similarities  

SPHD and SCHD, despite their differences, share several similarities, such as dividend focus, broad exposure to U.S. equities, income generation and low expenses. 

Here are details on the similarities between SPHD and SCHD: 

  • Dividend focus: Both ETFs are designed to provide exposure to dividend-paying stocks. They aim to capture the potential income generated from regular dividend payments made by companies to their shareholders. 
  • Broad market exposure: Both ETFs primarily focus on U.S. equities. While their underlying indexes and methodologies differ, they aim to provide investors with exposure to a diversified portfolio of U.S. stocks. 
  • Income generation: Both ETFs are popular choices for income-oriented investors who seek potential dividend income. By holding dividend-paying stocks, investors can potentially generate regular cash flow in the form of dividend payments. 
  • Low expenses: Both the SPHD and SCHD ETFs are known for their relatively low expense ratios compared to actively managed funds. This characteristic makes them cost-effective investment options for investors seeking exposure to dividend-paying stocks. 

SPHD vs SCHD: Who Should Invest 

SPHD and SCHD may both be suitable for income-oriented investors, long-term investors and diversification seekers. SPHD’s focus on low volatility may make it more attractive to risk-averse investors, while SCHD’s focus on high quality U.S. companies with a track record of consistent dividend payments may make it more attractive to quality-conscious investors. 

SPHD vs SCHD: ETF Comparison Tool   

Investors can use etf.com’s ETF comparison tool and look at side-by-side data on any two ETFs in the entire investment universe. Simply enter ticker symbols, click the “Compare” button and you can compare current data, such as AUM, expenses, performance, holdings and more. For an example, here are the results from the tool’s SPHD versus SCHD comparison

Bottom Line  

SPHD and SCHD are both dividend ETFs; however, there are some differences investors should know. For example, SPHD focuses on high dividend yields and low volatility, while SCHD focuses on high quality companies with a history of paying dividends. Therefore, investors considering adding SPHD or SCHD to a portfolio should assess their investment goals and risk tolerance before making any investment decisions. 

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.