Comparing FDVV and SCHD: Which Offers Higher Yield and Lower Fees or a Technology Focus?
Fidelity High Dividend ETF (FDVV 0.05%) and Schwab U.S. Dividend Equity ETF (SCHD 0.44%) are both designed to invest in U.S. companies known for their strong dividend profiles. However, they employ different strategies and have distinct compositions.
This in-depth comparison will explore their cost structures, performance metrics, sector allocations, and other critical factors to determine which ETF may align better with your dividend investment strategy.
Quick Overview of Costs and Sizes
| Metric | FDVV | SCHD |
|---|---|---|
| Issuer | Fidelity | Schwab |
| Expense ratio | 0.16% | 0.06% |
| 1-yr return (as of Oct. 27, 2025) | 10.9% | (4.2%) |
| Dividend yield | 3.0% | 3.8% |
| Beta | 0.90 | 0.79 |
| AUM | $7.1 billion | $70.2 billion |
The beta value assesses price volatility in comparison to the S&P 500, with calculations based on daily returns.
In terms of cost, SCHD stands out as the more economical choice, with an expense ratio of just 0.06%, significantly lower than FDVV’s 0.16%.
Comparing Performance and Risk Between FDVV and SCHD
| Metric | FDVV | SCHD |
|---|---|---|
| Max drawdown (5 y) | (20.19%) | (16.86%) |
| Growth of $1,000 over 5 years | $2,419 | $1,716 |
What Holdings Are Included in Each ETF?
The Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index and comprises 103 companies, with significant investments in Energy (20%), Consumer Defensive (19%), and Healthcare (16%).
Notable holdings within this fund include AbbVie (ABBV 0.21%), Cisco Systems (CSCO +1.78%), and Merck & Co. (MRK 1.10%). This ETF boasts a solid performance track record of 14.0 years.
Conversely, the Fidelity High Dividend ETF emphasizes sectors like Technology (25%), Financial Services (19%), and Consumer Defensive (13%).
Its key holdings include NVIDIA (NVDA +4.98%), Microsoft (MSFT +1.98%), and Apple (AAPL +0.07%).
If you’re seeking additional insights on ETF investments, be sure to explore the comprehensive guide available at this link.
Key Insights on ETF Performance
Over the past decade, the Fidelity High Dividend ETF has achieved total returns averaging 13% annually, while the Schwab U.S. Dividend Equity ETF has generated 11% growth during the same timeframe.
Despite both ETFs slightly underperforming the S&P 500’s average return of 14% over the same period, their results are commendable given that both focus on dividend stocks, which tend to grow at a slower pace. Additionally, these annualized returns significantly exceed the long-term market average of approximately 10%.
It’s essential to note that neither ETF can be deemed categorically superior; both present attractive dividend yields, competitive expense ratios, and favorable risk profiles, issued by respected financial institutions.
However, for investors already exposed to the S&P 500—and consequently enjoying indirect investment in the Magnificent Seven—opting for FDVV might not be ideal. This ETF’s top three holdings are significant players in the Magnificent Seven, comprising nearly 18% of its total assets.
On the other hand, SCHD offers substantial exposure to sectors like energy, consumer defensive, and healthcare, which primarily include essential goods and services that are less sensitive to economic fluctuations.
Personally, I have considerable exposure to the technology sector and the Magnificent Seven as a whole. Therefore, if I had to choose between the two, I would prefer SCHD for its higher dividend yield and its holdings that lean towards defensive sectors, which I currently lack.
Definitions to Enhance Your Understanding
ETF (Exchange-Traded Fund): A type of investment fund that is traded on stock exchanges and holds a diversified basket of assets, such as stocks or bonds.
Dividend yield: The annual income generated from dividends, expressed as a percentage of the current market price of the investment.
Expense ratio: The annual fee expressed as a percentage of total assets that a fund charges to cover its operating expenses.
Beta: An indicator of the volatility of a fund in relation to the overall market; values exceeding 1 suggest greater volatility.
AUM (Assets Under Management): The total market value of all assets managed by a fund on behalf of its investors.
Max drawdown: The maximum observed percentage decline from the highest value of a fund to its lowest point over a defined time period.
Sector tilt: The allocation of more assets to specific sectors compared to a benchmark index.
Consumer Defensive: Companies that produce essential products, such as food and household items, which tend to perform well during economic downturns.
Growth of $1,000: The increase in value of a $1,000 investment over a specified duration, reflecting total returns.
Index (in ETF context): A benchmark that represents a collection of securities that a fund may seek to track or replicate.
