Everyone talks about SCHD as the king of dividend ETFs—low fees, top ratings, conservative picks. But here’s the kicker: in 2025, SCHD underperformed almost every major dividend ETF, returning only 3.89%.
Meanwhile, an international dividend ETF almost nobody knows about returned a whopping 31.05%. That’s eight times better than SCHD in just one year!
By the end of this article, you’ll know:
Why the “safest” choice failed
Which ETFs delivered massive returns
Which dividend ETF aligns with your goals
⚠️ Disclaimer: This is educational content, not financial advice. Investing involves risk, and past performance doesn’t guarantee future results. Always do your own research.
The Great Dividend Disappointment: SCHD
SCHD, the Schwab US Dividend Equity ETF, is the most recommended dividend ETF on YouTube and by financial advisors. It focuses on companies with 20+ years of consecutive dividends, offers a 3.81% yield, and charges just 0.06% expense ratio.
Sounds perfect, right? But in 2025:
SCHD returned only 3.89%
The S&P 500 returned ~24%
💡 Imagine investing $100,000 in SCHD at the start of 2025—you’d end with $103,890. Invest the same in S&P 500, and you’d have $124,000. That’s $20,000 left on the table.
Why? SCHD has heavy allocations in energy (19.69%) and utilities (11%), but only 5% in tech. 2025 was a tech-driven bull market—Apple, Microsoft, Nvidia, and Meta soared 30–50%, and SCHD barely touched them.
Lesson: Focusing only on high dividends can cost you growth.
The ETF Nobody Saw Coming: SCHY
While SCHD struggled, SCHY (Schwab International Dividend Equity ETF) returned an eye-popping 31.05%.
Why? Three key reasons:
Dollar weakness: The US dollar dropped ~9%, boosting international gains.
Valuation gap: US tech trades at 36x earnings, international stocks at 12–15x—super cheap.
Global rate cuts: Lower interest rates made dividend-paying international stocks more attractive.
SCHY invests in Europe, Asia, and emerging markets, with a 3.95% yield and an ultra-low 0.08% expense ratio.
💡 Key takeaway: international diversification works. Even if the dollar stabilizes, the value of these undervalued dividend stocks is still massive.
Covered Call ETFs: High Yield, Hidden Risks
ETFs like SPYI (11.69% yield) and JPQ (10.48%) promise huge monthly income—but there’s a catch. They sell call options on stocks, capping upside and potentially eroding NAV over time.
2025 returns: SPYI 17.32%, JPQ 15.97%
Risk: Your principal slowly disappears if markets rise sharply.
✅ Ideal for retirees needing monthly income or investors expecting flat markets.
❌ Not ideal if your goal is long-term wealth growth.
Dividend Growth ETFs: The Sweet Spot
DGRO (iShares Core Dividend Growth ETF) is the perfect balance:
16.54% return in 2025 (vs SCHD’s 3.89%)
2.08% yield, lower than SCHD’s 3.81%
Includes growing tech dividend stocks like Microsoft and Apple
💡 Insight: Dividend growth > high yield. A smaller, growing dividend can outperform a static high yield over time.
Other strong options:
VIG (Vanguard Dividend Appreciation ETF): 15.05% return, conservative, 1.73% yield
VYM (Vanguard High Dividend Yield ETF): 2.49% yield, 400+ stocks for max diversification
SD (SPDR Dividend Aristocrats ETF): 2.6% yield, 20+ years of dividend growth
2026 Outlook
Tech stocks trading at 35–40x earnings can’t last forever. Dividend stocks at 15x earnings with 3–4% yields are looking super attractive. Analysts suggest 2026 could be a breakout year for dividends as investors reassess valuations.
✅ Strategy tip: Mix ETFs for balance. Example:
40% DGRO
30% VIG
30% SCHY
Average 2025 return for this allocation? ~20.5%
Final Takeaway
2025 taught us:
SCHY crushed SCHD by 27.16 points
DGRO proved dividend growth > pure income
Covered calls pay monthly income but have trade-offs
Build your plan, stay consistent, and let compounding do its magic. That’s how real wealth through dividends is created.
💥 Ready to start building your 2026 dividend portfolio?
Trade top-performing ETFs like SCHY, DGRO, and VIG now with moomoo. Click here to invest today: https://j.moomoo.com/0xFRE4
📈 Don’t wait—your portfolio growth starts now!
#DividendInvesting #ETFInvesting #FinanceTips #SCHY #DGRO #VIG #InvestSmart #2026Wealth #PassiveIncome
