SCHD vs. DGRO: What’s The Difference?

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

The expense ratio of SCHD is 0.02 percentage points lower than DGRO’s (0.06% vs. 0.08%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than DGRO over the past 6 years.

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

Summary

SCHD DGRO
Name Schwab U.S. Dividend Equity ETF iShares Core Dividend Growth ETF
Category Large Value Large Value
Issuer Schwab ETFs iShares
AUM 26B 20B
Avg. Return 14.80% 12.46%
Div. Yield 2.89% 2.04%
Expense Ratio 0.06% 0.08%

The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.

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%.

SCHD’s dividend yield is 0.85% higher than that of DGRO (2.89% vs. 2.04%). Also, SCHD yielded on average 2.34% more per year over the past decade (14.80% vs. 12.46%). The expense ratio of SCHD is 0.02 percentage points lower than DGRO’s (0.06% vs. 0.08%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

SCHD vs. DGRO - Industry Exposure

SCHD DGRO
Technology 16.26% 18.98%
Industrials 18.05% 12.52%
Energy 1.87% 0.11%
Communication Services 4.96% 4.53%
Utilities 0.0% 7.34%
Healthcare 12.64% 17.55%
Consumer Defensive 14.04% 10.24%
Real Estate 0.0% 0.0%
Financial Services 21.69% 18.47%
Consumer Cyclical 8.36% 7.42%
Basic Materials 2.13% 2.83%

The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

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%.

SCHD is 3.22% more exposed to the Financial Services sector than DGRO (21.69% vs 18.47%). SCHD’s exposure to Industrials and Technology stocks is 5.53% higher and 2.72% lower respectively (18.05% vs. 12.52% and 16.26% vs. 18.98%). In total, Utilities, Energy, and Basic Materials also make up 6.28% less of the fund’s holdings compared to DGRO (4.00% vs. 10.28%).

Holdings

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
Verizon Communications Inc 3.96%
Cisco Systems Inc 3.96%

SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.

PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

SCHD DGRO
Mean Return 0 0
R-squared 0 0
Std. Deviation 0 0
Alpha 0 0
Beta 0 0
Sharpe Ratio 0 0
Treynor Ratio 0 0

The Schwab U.S. Dividend Equity ETF (SCHD) has a Mean Return of 0 with a Standard Deviation of 0 and a Treynor Ratio of 0. Its Sharpe Ratio is 0 while SCHD’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a R-squared of 0.

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

SCHD’s Mean Return is 0.00 points lower than that of DGRO and its R-squared is 0.00 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than DGRO. The Alpha and Beta of SCHD are 0.00 points lower and 0.00 points lower than DGRO’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

SCHD vs. DGRO - Annual Returns

Year SCHD DGRO
2020 15.11% 9.47%
2019 27.28% 30.02%
2018 -5.46% -2.24%
2017 20.88% 22.84%
2016 16.25% 15.27%
2015 -0.21% -0.62%
2014 11.66% 0.0%
2013 32.9% 0.0%
2012 11.4% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

SCHD had its best year in 2013 with an annual return of 32.9%. SCHD’s worst year over the past decade yielded -5.46% and occurred in 2018. In most years the Schwab U.S. Dividend Equity ETF provided moderate returns such as in 2012, 2014, and 2020 where annual returns amounted to 11.4%, 11.66%, and 15.11% respectively.

The year 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

SCHD vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHD $10,000 $19,423 14.80%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in SCHD would have resulted in a final balance of $19,423. This is a profit of $9,423 over 6 years and amounts to a compound annual growth rate (CAGR) of 14.80%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

SCHD’s CAGR is 2.34 percentage points higher than that of DGRO and as a result, would have yielded $157 less on a $10,000 investment. Thus, SCHD outperformed DGRO by 2.34% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply