7 Dividend ETFs That Could Beat SCHD Over the Next Decade

"To generate passive income while also potentially earning capital appreciation, many investors turn to dividend paying stocks. Dividends are regular payments companies deliver to shareholders out of their profits. These are usually paid quarterly or annually. But to also get instant diversification, many investors also turn to dividend paying ETFs. These are professionally managed funds that invest in a variety of dividend paying stocks. Each has its own strategy, focus and overall goal."

"One of the most popular dividend paying ETFs out there is the Schwab U.S. Dividend Equity ETF (SCHD). This fund stands out for diversification and its ultra low expense ratio of 0.06%. It invests in high quality companies with a track record for sustainability of dividends. But it also screens companies for strong financials. And it has delivered an impressive five year return of about 29%."

"The Vanguard Dividend Appreciation ETF (VIG) focuses on large cap companies with a history of increasing their dividends year over year. This may in turn lead to higher income growth for investors. In addition, VIG has a higher focus on the technology sector than SCHD. VIG's exposure to tech is around 28%, while SCHD's exposure is about 8%. The tech sector has overall outperformed in recent years, especially with the growth of artificial intelligence (AI)."

Dividend-paying stocks provide regular payments from company profits, often paid quarterly or annually, and dividend ETFs provide instant diversification by holding many dividend-paying stocks. The Schwab U.S. Dividend Equity ETF (SCHD) emphasizes high-quality companies, screens for strong financials, and charges an ultra-low 0.06% expense ratio while delivering about a 29% five-year return. The Vanguard Dividend Appreciation ETF (VIG) targets large-cap companies with a history of raising dividends, has greater technology-sector exposure (around 28% versus SCHD's about 8%), broader diversification with over 300 stocks, and holds about $116.5 billion in net assets.

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