In the five years to September 2026, SCHD returned 9.5% a year and VOO returned 13.8%, dividends reinvested. SCHD holds a hundred dividend payers chosen by a screen. VOO holds the five hundred largest US companies, dividend payers included. The question is not which pays more income — it is what the screen costs or earns you.
For a representative saver about twenty years from retirement, investing in a taxable account: On known costs alone, SCHD and VOO come out about even here. VOO's 28.2-point lead in the plan's success rate comes from how the two funds performed over the last five years, so it holds only if those years repeat.
With only the known costs — the same market for both funds, differing by fees and dividend tax — the money lasted in 90.5% of 10,000 simulated futures with SCHD and 92.3% with VOO. Using each fund's own returns from October 2021 to September 2026 instead, the figures were 70.1% and 98.3%. Both funds were run against the identical sequence of market shocks.
Dividends are not extra return. A dividend is paid out of the fund’s value: the share price drops by the amount paid. What matters is total return, dividends included, and that is what both scenarios above use. A higher yield changes how the return arrives, not how big it is.
The tax on getting paid. Because SCHD pays out more, more of its return is taxed each year in a taxable account. VOO’s return arrives mostly as price growth, which is not taxed until you sell.
SCHD tracks the Dow Jones U.S. Dividend 100 Index — it screens for ten years of dividend payments, then ranks on cash flow to debt, return on equity, yield and dividend growth. VOO tracks the S&P 500 — it holds the 500 large US companies in the index, weighted by size.
SCHD charges 0.06% a year and yields 3.00%; VOO charges 0.03% and yields 1.04%.
Returns and volatility are measured from monthly returns with dividends reinvested over 60 months — one sample from one market, and weak evidence for telling two broad funds apart, which is why the known-cost result is reported first. Dividends are taxed at 15% in a taxable account by default, the qualified rate most households pay; the page also shows the 0% and 20% brackets. It is the only tax modeled. A 3.8% net investment income tax can also apply to dividends once modified adjusted gross income passes $200,000 ($250,000 joint); it is not included. Retirement spending is held at 70% of income in today's dollars, and contributions exclude any employer match.
Not because of its dividends. Income from a dividend fund is not safer than selling shares of a broad fund; both come out of the same total return. The difference that is known in advance is tax, which favors VOO in a taxable account.
Only if you prefer SCHD’s narrower mix of companies. Retiring does not make dividends a better source of spending money than selling shares.