SCHD is up about 5% this year.
Sounds decent… until you realize the S&P 500 is up 17% and the NASDAQ is soaring past 20%.
If you own SCHD, you’ve probably had this uncomfortable thought lately:
“Did I mess up?”
You’re not alone. Millions of dividend investors are asking the same question.
But here’s the truth nobody on FinTok or X wants to say out loud:
👉 SCHD isn’t broken.
👉 It’s doing exactly what it was designed to do.
And the investors who actually understand that?
They’re not selling.
They’re buying more.
(Quick disclaimer: I’m not a financial advisor. This is not financial advice. Always do your own research before investing.)
The Uncomfortable Reality: SCHD Has Been Lagging
Let’s address the elephant in the room.
Over the past three years, SCHD has been one of the weakest performers among major dividend ETFs.
It’s lagged:
VIG
DGRO
Even VYM
After spending nearly a decade ranking in the top third of Morningstar’s large-value category, SCHD is now hovering near the bottom.
So… what happened?
The answer is surprisingly simple.
The Real Reason SCHD Is “Underperforming”
SCHD has only ~27% exposure to growth stocks.
Meanwhile:
The S&P 500 is ~56% growth
The Magnificent 7 (Nvidia, Apple, Microsoft, Amazon, etc.) are driving most of the market’s gains
SCHD owns none of them.
Its tech allocation?
👉 Around 9%
The S&P 500?
👉 About 35%
That gap explains almost everything.
But here’s where it gets interesting…
This Isn’t a Bug — It’s the Feature
SCHD is intentionally built this way.
It screens for companies that:
Have paid dividends for at least 10 consecutive years
Show strong cash flow
Maintain solid balance sheets
Consistently grow dividends
Companies like Nvidia — which reinvest aggressively and pay minimal dividends — will never qualify.
So the real question isn’t:
“Is SCHD failing?”
The real question is:
“Did you understand what you bought?”
A Real-World Example Most Investors Ignore
Meet Harry.
Harry bought SCHD in early 2022 — right before the market collapsed.
That year:
The NASDAQ fell 33%
Tech portfolios were crushed
Panic was everywhere
But SCHD?
👉 Down only ~3%
👉 Dividends kept increasing
While his tech-heavy friends were panicking, Harry’s passive income kept flowing.
That’s not luck.
That’s design.
During:
2020 crash → SCHD fell ~28% vs S&P 500’s ~34%
2022 bear market → SCHD beat the S&P 500 by 9+ percentage points
Morningstar confirms it:
Lower volatility
Better downside protection
Strong risk-adjusted returns
So Why Does SCHD Feel So Bad Right Now?
Because everything is going right for tech stocks.
AI hype. Mega-cap dominance. Growth on steroids.
But markets rotate.
They always do.
And when that rotation happens, SCHD is positioned to shine again.
Still… let’s be honest.
Most investors don’t want to just wait.
They want growth now and income later.
That’s where things get interesting.
The Missing Piece: Pairing SCHD With Growth
Instead of abandoning SCHD, what if you paired it with what it lacks?
Enter: QQQ
QQQ tracks the NASDAQ-100 — home to:
Nvidia
Apple
Microsoft
Amazon
Broadcom
Where SCHD has zero exposure to the Magnificent 7, QQQ owns all of them.
Over the last 10 years:
QQQ → ~20% annualized return
SCHD → ~12% annualized return
$10,000 invested:
QQQ → nearly $60,000
SCHD → around $29,000
But here’s the key difference…
QQQ dividend yield: ~0.45%
SCHD dividend yield: ~3.8%
👉 These ETFs aren’t competitors.
They’re complements.
The 70/30 Strategy That Actually Makes Sense
Harry figured this out after 2022.
He shifted to:
70% SCHD (income & stability)
30% QQQ (growth & innovation)
Now his portfolio includes:
Healthcare and dividend stalwarts via SCHD
AI and tech leaders via QQQ
During bull markets, QQQ captures upside.
During downturns, SCHD cushions the fall and keeps paying.
And those dividends?
SCHD’s dividend has grown over 500% since 2011 — roughly a 13% CAGR.
That’s how yield on cost quietly compounds wealth.
The Real Investing Test Nobody Talks About
SCHD will probably continue to underperform as long as AI dominates headlines.
You’ll feel stupid holding it.
Your friends will flex tech gains.
Your portfolio might look “boring”.
This is the emotional test of investing.
History is clear:
Value led (2000–2007)
Growth dominated (2013–2021)
Value surged (2022)
Growth returned (2023–2024)
Markets rotate.
Recency bias is powerful.
Memory is short.
The investors who win long-term aren’t the ones chasing what’s hot.
They’re the ones who build balanced portfolios and stay disciplined.
Final Thought
SCHD isn’t failing.
It’s just unfashionable.
And in investing, unfashionable often comes right before undervalued.
If you’re building:
A long-term passive income machine
A portfolio that survives full market cycles
Wealth you can actually sleep with at night
Then SCHD still deserves a seat at the table — especially when paired intelligently with growth.
Want to Start or Build Your ETF Portfolio the Smart Way?
If you’re looking to buy ETFs like SCHD, QQQ, or S&P 500 funds, you can do it easily on moomoo — a powerful platform trusted by long-term investors.
👉 Open a moomoo account here:
🔗 https://j.moomoo.com/0xFRE4
Low fees. Advanced charts. ETF-friendly.
Perfect for building a balanced income + growth portfolio.
💬 What’s your current allocation — income, growth, or both?
Drop a comment and let’s talk strategy.
#DividendInvesting #ETFs #PassiveIncome #SCHD #QQQ #LongTermInvesting #WealthBuilding #moomoo
