28% are rated ESG leaders<\/a> in the case of VYM. The higher percentage in SCHD can be attributed to its fewer holdings. <\/p>\n\n\n\nBased on MSCI ESG Research LLC’s ratings, we can conclude that both funds are considerably resistant to changes due to environmental, social, and governance developments. Whichever ends up in your portfolio, you can rest assured of impressive stability even in the face of distortions and sudden changes.<\/p>\n\n\n\n
How to invest in SCHD and VYM<\/h2>\n\n\n\n
We have mentioned how diverse dividend ETFs are and how much stability they can bring to your portfolio. But how do you invest in them?<\/p>\n\n\n\n
The first step is to identify the dividend exchange-traded fund(s) you are interested in. In this case, we are talking about SCHD and VYM. Both are popular, so you will most likely find them on your broker\u2019s website. But just before you buy, you should analyze both options and ensure they match your expectations and preferences as an investor. <\/p>\n\n\n\n
Your assessment should focus on points like the dividend yield, expense ratio, stock size, and historical performance. Fortunately, these are the talking points of this article, making your assessment faster and easier. For example, the rule of thumb is to opt for those with a track record of paying dividends annually for the previous five years or higher (the higher, the better). Likewise, those with an expense ratio under 0.07% is good, but the lower, the better. <\/p>\n\n\n\n
It is also important to put your money on dividend ETFs that invest in companies with large, medium, or small-cap companies. The safest of the bunch are those that focus on large-caps, while the riskiest hold only (or mostly) small-cap stocks. <\/p>\n\n\n\n
With all of these boxes checked, you can go ahead to buy your desired amount of SCHD and\/or VYM from your broker or directly from Schwab and Vanguard websites. <\/p>\n\n\n\n
Final Verdict<\/h2>\n\n\n\n
Yes, we are used to ETFs that focus on index-tracking and growth investing. But we also have those that provide income by holding only dividend-paying stocks in their portfolios. They also ensure diversification and may even continue if the paying company records a drop in earnings. Moreover, they are structured such that even if some of the stocks in the fund\u2019s holdings reduce their dividends, the eventual overall dividend of the fund still remains relatively the same. <\/p>\n\n\n\n
Investors can decide to take the dividend as returns or put it back into the fund – reinvestment. Some dividend ETFs focus on selected stocks, sectors\/industries, or regions, while others cover the entire market. <\/p>\n\n\n\n
Which should you choose – Dividend Growth or Dividend Yield?<\/h3>\n\n\n\n
If you really have to choose between SCHD and VYM, you should choose based on your investment goal. Our discussion so far has shown the Schwab US Dividend Equity ETF (SCHD) as an excellent ETF offering a balance of growth and yield. Conversely, the Vanguard High Dividend Yield ETF (VYM) focuses more on dividend yield than growth. Investors with a long-term plan and low-risk profile will find the higher diversified dividend growth of SCHD ideal for their portfolios. Likewise, VYM can be the right choice for investors on a short-term horizon, prioritizing immediate returns at a higher rate. <\/p>\n\n\n\n
Finally, you can rest assured that you are not making the wrong investment decision, whichever you end up with.\u00a0<\/p>\n\n\n\n
Good luck!<\/p>\n","protected":false},"excerpt":{"rendered":"
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