DGRO vs. SCHA: What’s The Difference?

The iShares Core Dividend Growth ETF (DGRO) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between DGRO and SCHA? And which fund is better?

The expense ratio of DGRO is 0.04 percentage points higher than SCHA’s (0.08% vs. 0.04%). DGRO also has a higher exposure to the technology sector and a lower standard deviation. Overall, DGRO has provided lower returns than SCHA over the past 6 years.

In this article, we’ll compare DGRO vs. SCHA. We’ll look at holdings and industry exposure, as well as at their fund composition and performance. Moreover, I’ll also discuss DGRO’s and SCHA’s portfolio growth, risk metrics, and annual returns and examine how these affect their overall returns.

Summary

DGRO SCHA
Name iShares Core Dividend Growth ETF Schwab U.S. Small-Cap ETF
Category Large Value Small Blend
Issuer iShares Schwab ETFs
AUM 20B 16.51B
Avg. Return 12.46% 12.62%
Div. Yield 2.04% 0.98%
Expense Ratio 0.08% 0.04%

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.

DGRO’s dividend yield is 1.06% higher than that of SCHA (2.04% vs. 0.98%). Also, DGRO yielded on average 0.17% less per year over the past decade (12.46% vs. 12.62%). The expense ratio of DGRO is 0.04 percentage points higher than SCHA’s (0.08% vs. 0.04%).

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Fund Composition

Industry Exposure

DGRO vs. SCHA - Industry Exposure

DGRO SCHA
Technology 18.98% 14.91%
Industrials 12.52% 15.37%
Energy 0.11% 3.35%
Communication Services 4.53% 3.5%
Utilities 7.34% 1.83%
Healthcare 17.55% 16.5%
Consumer Defensive 10.24% 3.75%
Real Estate 0.0% 7.83%
Financial Services 18.47% 14.49%
Consumer Cyclical 7.42% 14.48%
Basic Materials 2.83% 3.98%

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.

SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.

DGRO is 4.07% more exposed to the Technology sector than SCHA (18.98% vs 14.91%). DGRO’s exposure to Financial Services and Healthcare stocks is 3.98% higher and 1.05% higher respectively (18.47% vs. 14.49% and 17.55% vs. 16.5%). In total, Energy, Basic Materials, and Communication Services also make up 3.36% less of the fund’s holdings compared to SCHA (7.47% vs. 10.83%).

Holdings

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

SCHA - Holdings

SCHA Holdings Weight
AMC Entertainment Holdings Inc Class A 0.67%
Caesars Entertainment Inc 0.51%
Cloudflare Inc 0.48%
NovoCure Ltd 0.45%
Plug Power Inc 0.41%
10x Genomics Inc Ordinary Shares – Class A 0.34%
GameStop Corp Class A 0.28%
RH 0.27%
Penn National Gaming Inc 0.27%
Axon Enterprise Inc 0.27%

SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.

10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.

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Risk Analysis

DGRO SCHA
Mean Return 0 1.14
R-squared 0 82.26
Std. Deviation 0 18.68
Alpha 0 -4.65
Beta 0 1.25
Sharpe Ratio 0 0.7
Treynor Ratio 0 9.62

The iShares Core Dividend Growth ETF (DGRO) has a Standard Deviation of 0 with a Alpha of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while DGRO’s R-squared is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.

The Schwab U.S. Small-Cap ETF (SCHA) has a R-squared of 82.26 with a Beta of 1.25 and a Treynor Ratio of 9.62. Its Mean Return is 1.14 while SCHA’s Standard Deviation is 18.68. Furthermore, the fund has a Sharpe Ratio of 0.7 and a Alpha of -4.65.

DGRO’s Mean Return is 1.14 points lower than that of SCHA and its R-squared is 82.26 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than SCHA. The Alpha and Beta of DGRO are 4.65 points higher and 1.25 points lower than SCHA’s Alpha and Beta.

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Performance

Annual Returns

DGRO vs. SCHA - Annual Returns

Year DGRO SCHA
2020 9.47% 19.35%
2019 30.02% 26.54%
2018 -2.24% -11.75%
2017 22.84% 15.04%
2016 15.27% 19.88%
2015 -0.62% -4.24%
2014 0.0% 6.53%
2013 0.0% 39.59%
2012 0.0% 18.24%
2011 0.0% -2.95%
2010 0.0% 28.31%

DGRO had its best year in 2019 with an annual return of 30.02%. DGRO’s worst year over the past decade yielded -2.24% and occurred in 2018. In most years the iShares Core Dividend Growth ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.

The year 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.

Portfolio Growth

DGRO vs. SCHA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
DGRO $10,000 $19,580 12.46%
SCHA $10,000 $17,601 12.62%

A $10,000 investment in DGRO would have resulted in a final balance of $19,580. This is a profit of $9,580 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.46%.

With a $10,000 investment in SCHA, the end total would have been $17,601. This equates to a $7,601 profit over 6 years and a compound annual growth rate (CAGR) of 12.62%.

DGRO’s CAGR is 0.17 percentage points lower than that of SCHA and as a result, would have yielded $1,979 more on a $10,000 investment. Thus, DGRO performed worse than SCHA by 0.17% annually.


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