SCHD

Sashamirae17

Starting to build a dividend-focused portfolio and slowly shifting towards more ETFs for stability (SCHD, VTI). Also keeping a small allocation in growth stocks like NVDA/AMD. Trying to stay consistent with contributions and not overthink short-term swings. Curious what everyone else here is focusing on lately

Think-Variation2986

I haven't been trading credit spreads long enough to answer your questions with a lot of confidence. Regarding ROI, it seems like it can be quite substantial up to a certain point. I need some more time and experience with it before saying anything for certain. What I've been doing is taking half of my profits and buying boring income producing securities like SCHD, NOBL, PGX, BND, BNDW, VNQ, etc. Whether it is worth it or not, I can't answer. In my case, it has to be.

alone-in-the-chat

Is SCHD a buy?

oloolaa

Thanks for sharing your experience. What made you decide to change from SCHD?

DiRo6

My move is that I’m holding 200k shares of Tilray! And buying one share of SCHD. lol

penguinpandapear

My Roth IRA is 90% SCHD so it’s only up 3.5% YTD (heavily carried by 10% mag7). Meanwhile taxable portfolio is up 59% YTD (91% GOOG with leverage). I don’t think I’ll change anything given that Roth is so much smaller than taxable portfolio and retirement is so far away (at least 35 years) and I am kind of a doomer about the FAR future anyways. Better to have the money in taxable portfolio so I can actually do something with the gains instead of needing to wait until I’m old.

Forsaken-Mark-1898

Ive been going back and forth on this as well. I have about 3 yrs until I stop working. My Bucket 1 is fully funded by my mil retirement which covers all monthly expenses and with a $1700 a month positive delta. Bucket 2 will be funded when I redistribute (2) 401ks. Right now Im looking at VOO, VTI, VT and SCHD. Bucket 3 is my Roth IRA and some precious metals. The IRA contains three bonds which have a yield of between 4.3% - 7.4%, as well as some REITS, International and Small/Mid cap ETFs.

NashDaypring1987

Good point. Yet, there seems to be a cult following for SCHD. It only takes a quick look at charts to see the truth.

yodamastertampa

SCHD has long term data but still performs poorly. JEPI also has a long track record in CC funds but underperformed all its peers.

giraloco

And once the worst is not realized people who buy metals will suffer double digit percent losses. At current prices SCHD is probably a better safe haven.

Reddit4Play

If you don't know a thing about investing and want to invest in stocks then step 1 is to open a brokerage account (ideally a retirement account with some kind of tax advantages, like an IRA or Roth IRA if you live in the US). I'm not familiar with other countries, but stick with whatever passes for the big trusted brokers wherever you live like Fidelity, Vanguard, Schwab, or Merill. The last thing you want is for some Chinese fintech startup to abscond with your retirement money. Stocks and funds composed of multiple stocks all go by "tickers," or abbreviations. It's generally agreed that you won't go wrong putting your money in large diversified stock funds like VOO (largest 500 US companies) or VT (entire world stock index). Most of their value over time will come from a rising market value if you choose to sell your shares back to the market. If you'd prefer something more like a second salary (income) instead then you may prefer something like SCHD (which focuses on companies with larger payouts) or VIG (which focuses on companies which grow their payouts more over time). Many people say you should also diversify into assets besides stocks, so putting some of your investing money (maybe 10% or less if you're under 30 and up to 50% if you're in your 50s or later) in a bond fund like BNDW is worth considering. Overall this will invest your money in a wide variety of assets so that you can receive an average profit based on their performance over time. Don't use money you think you might need in the next 5 years to invest in stocks. Prices will fluctuate unpredictably and selling when prices are low because you suddenly need the money is how you lose a lot of money forever. You may hear about "diversification," which is protecting your investments from bad luck by owning lots of different things. Each of these funds has hundreds of unique assets in it so owning just one or two of the funds is plenty of diversification. It's very difficult to get a better return than the market average you'll get from one of these funds, but it is possible if you work hard and have a knack for investing in individual companies. If you think you might enjoy learning about it and want to try beating the average you can start with books like One Up on Wall Street and Beating the Street by Peter Lynch. He was one of the best investors of the last hundred years and his approach is very common sense. Start with just a few companies you think might excel with just 1 or 2% of your money in each. You'll make a lot of mistakes at first and it's better to lose 1 or 2% than 10 or 20%. You'll also get a lot of benefit from a more numbers-based approach, which you can start learning about in a book like The Intelligent Investor by Benjamin Graham or Aswath Damodaran's corporate finance and asset valuation courses on YouTube. After you've invested 10-30 companies over the course of 5 or 10 years and finished several of those books and courses you'll know for sure if you're cut out for individual stock investing or should stick to the large diversified funds.

trader_dennis

Depends on the stocks. 90 percent SCHD or similar higher yielding stocks are still okay. I’m 61 with 85/15 and a portfolio yield of 3.2%

Confident_Oil_7495

Ok I'm thinking about these changes based on everyone's feedback: Bucket 1: 5% in swvxx/vmfxx/spaxx (wherever my accounts land after consolidation) and 5% VTIP Bucket 2: 40% VOO/FXAIX/SWPPX 20% FFTWX/SCHD/VTV 5% SCHF Bucket 3: 30% SWLGX As retirement nears I'll shift percentages from Bucket 2 to Bucket 1 and reduce percentages in Bucket 3 as well.

SirGlass

>but others say "Holding too much of your portfolio in one investment, even a diversified one, can leave you overexposed to risk. This does not really make sense , most target date funds do not hold "One investment" they hold usually some mix of USA stocks , foreign stocks , bonds This is not "One investment" it may be one mutual fund but it holds all sorts of different investments Its perfectly fine to invest in one fund as long as the fund is diversified like a target date fund is. Fore example take two portfolios 1 . VT 2. Split between VTI , VOO, QQQ, SCHG, SCHD , SPLG, IVV, VYM what one is more diversified , 1 2. holds a bunch of overlapping funds that concentrate on USA large cap stocks, just holding a bunch of funds is not diversification , you have to look at what the underlying funds hold VT is a world index fund that holds almost every public company on earth, 2 is a bunch of funds that only hold USA companies and concentrated on large cap companies. 2 is actually less diversified despite holding a bunch of funds

anonkraken

My options allocation is about 30%. The rest rides in safe boring shit like VOO, VIG and SCHD. Never enter a single options position with more than 7.5% of NAV.

honestignorance

Buy SCHD when you're close to retiring, no point before that. For the options, check out Options Bootcamp. Listen to every episode, a couple times if you need to. By the end you will have a pretty good fundamental understanding of options trading. That or learn 0DTE SPY and get to work, but I wouldn't advise that one for most people

Impossible_Box8854

Of course anytime! I made a LOT of research on them. And I do like SCHD for dividends and being steady in price. I like VOO because it’s too companies in the United States and really good growth Potential continue to grow always. Then VT is basically the same but it’s Globally so I have an ETF for the States and one that’s internationally also which will continuously grow. And lastly I just added recently is SPMO I started looking into. Also great return as you can see and growth throughout the last 5-10 years. Great for me in my case to start at young and just make weekly occurring investments in all of them. I’m barely turning 23 so I really wanted to figure out by 25 what I really want to invest my money in and where I can see it growing for the next 35 years until I turn 60 and take it all out tax free and live my live with no regrets.

_jasmin17

i think you have a solid list, but a lot of your ETFs overlap in strategy, and you can trim these down specifically, SPYI, QQQI, JEPQ, and JEPI all distribute monthly dividends by selling covered calls. i’d just hold JEPQ and JEPI because they are larger funds with lower expense ratios, and they are the same strategies as the other two ETFs similarly, SCHD, DGRO, and HDV all target dividend stocks. there’s effectively no difference between investing in a dividend ETF that distributes quarterly and investing in a regular index ETF and selling it yourself. personally i’d put all my money in VOO over these

Impossible_Box8854

Your entire portfolio only needs SCHD, VOO, VT and if you want SPMO

Digital-Doc-777

If that is the goal, then try this: Stability: VTI Balance and diversity: VIG, SCHD, crypto, gold/silver Conservative growth: SCHG

Digital-Doc-777

Confusing to have multiple funds in so many different buckets. Don't think that SCHG (growth) and SCHD (value/dividend) belong in the same bucket, for example.

NoodleEater21

Question about holding US stocks I have a few K in US stocks/ETFs- mainly NVDA, QQQM, SCHD. In light of the increase in gold's value & higher performance recently, countries buying gold instead of US treasuries and the de-dollarisation/valuation of the USD, I need essential advice concerning my US investments: * Given the USD is being devalued & becoming unpopular to hold, should I hold or sell my US investments to avoid further losses? If sell, how much? * If it's not too late to buy gold, how should I do this as I don't live in the USA? Do you buy etfs linked to the value of gold or just gold mining companies? * As the USD is losing its value and popularity, would this make a gold etf/stock from a US company lose its value eventually? My initial plans with investing were to hold these ETFs/stocks for the LT but I am very concerned I may lose the gains I made, should the USD devalue further. Appreciate the advice.

EggIsGettingRekt

SCHD and VYM are solid if you want dividends without overcomplicating things. REITs like VNQ can boost yield too, just a bit more volatile

cool_yuwen

Gently, you're making this way too complicated. VTI already holds the stocks in SCHD, VYM, JEPQ, etc. You're created a portfolio with a ton of unnecessary overlap.

zooka19

Will update the growth side later if I remember to: One portfolio, two pies. Defensive: VUSD - 26.66% FUSD - 13.33% JEPQ - 13.33% EQQQ - 13.33% R1GB - 13.33% MSFT - 4% BRK.B - 4% JNJ - 4% COST - 4% WMT - 4% Growth: VUSD - 26.66% FUSD - 13.33% JEPQ - 13.33% EQQQ - 13.33% R1GB - 13.33% Remaining 20.02% is up of Tech/Crypto companies Was thinking at some point to replace FUSD, but there really isn't an SCHD alternative in the UK. Whilst FUSD has really nice growth, the dividend yield is 1.6%, which has gone down in the last 3 years. Almost feels like a less volatile S&P500 with slightly less returns.

Think_Fisherman5968

Diversification is also key. At the very least create a backbone for your portfolio. VTI, VOO, SPMO, SCHD are some good ones. You’re essentially buying the United States stock market, not just individual stocks. Buying individual stocks overcomplicates things since you have to actively balance your portfolio all the time. You shouldn’t have to micromanage investments, unless they’re meant to be active.

ace_OO7_

The most I ever had was about 500 every day the market was open but I hated my life because I worked too much. I put it in SCHD, VOO,VIG, and a few dividend stocks but have since sold the SCHD. In hindsight, I probably should have just done VOO, VIG, or QQQ. Dividend funds tend to underperform the S&P 500.

zooka19

Wish I had more NBIS, waiting on next pay day. ETF-wise, thinking to maybe ditch FUSD. It looks like VOO with slightly higher dividends with slightly less growth. Nothing like SCHD at all now.

Abipolarbears

I originally bought SCHD as a value play to pair with my more tech/growth heavy investments. I'm thinking about canceling my recurring investments and rotating into another value fund until I hit 1 year invested and then pivot the entire bucket.  Does anyone have a value/factor play they'd recommend that I look into?

FINomad

Keep in mind that the "anti-dividend crew" isn't actually anti-dividends. At least for me, I am anti-*chasing* dividends. I don't care that VTI throws off a 1.x% dividend. If the corporations can't figure out anything better to do with that cash, give it back to me. But, that doesn't mean I'm going to be an idiot that chases dividends by investing in SCHD. Total returns *include* dividends, but we don't *chase* dividends. Do you understand the difference? >It reeks of stock picking. We generally don't stock pick at all. We pick VTI (or some other broad based total market fund) and take *all* the dividend-paying stocks and non dividend-paying stocks together. Dividend-chasers are the ones picking stocks. I just hold the whole US market.

therealjerseytom

Sure! Overall it's a 30/70 split between equities and fixed income. My base defensive layer is the emergency fund, which I split up in rolling treasury bills with one maturing every week. Alternatively you could do SGOV, which yields a little less, but the T-bills are so easy I figure why not squeeze the most out of them. Substantial amount of municipal bonds via a national, low-expense ratio ETF, MUB. I also have in-state municipals in MSNCX, even though the expense ratio is brutal, and some individual in-state bonds laddered over the next few years. I'd be all in on individual bonds if not for the fact they're not call protected. FXNAX rounds things out with some other bond sectors. I do have a position of ANGL in this account, which I think I'll move to my higher-risk portfolio. For equities I have a substantial chunk in defensive sectors that tend to outperform the broader market during recessions - consumer staples (VDC) and utilities (XLU). The utilities position I think may have some additional upside if electric demand increases in the future by means of data centers, electric vehicles, etc. Then I also have some dividend-oriented (and sub-1.0 beta) positions of HDV and SCHD. The goal of that equity blend is to lean heavily into defensive sectors and avoid economically sensitive sectors like tech and consumer cyclicals.

weareacoupleoo

I made the mistake initially of having my 401k and Roth almost mirroring each other. So if you can find low cost index funds then you should have that as bulk or your 401k and at least in my humble opinion take different risks in your brokerage account. e.g. I used to have S&P 500 index fund, small cap, in 401k and SPY, SCHA in my Roth brokerage. Then realized that it was the same risk and in my brokerage account I have what 401k doesn't offer (bit of SCHG, SCHD, SCHH, SCHE, GLD, BTC). hopefully this helps.

Various_Couple_764

5The ammount you need to invest can easily be calculated. Take the ammount of income per year you want and divid it by the yield of the ETF you are interested intwist. So if you want 12k a year from a SPYI with a yield of 11% you would need 109K invested. Now you don't need all that money before you buy the bund. I you put 7000 in a Roth account with SPYI and you reinvest all dividends you will reach 109K in about 9 years. in 30 years you will have 1.6 million in the Roth producing 170K a year of income. You could do the same in a taxable account if you wish. Read the book The Income Factory and look at theArmchair income on youtube. There are a lot of funds with yields between 6% to just above 10%. While SCHD is a good fund it is not necessarily the best choice if you want income. I took growth I had in a taxable account and started converting that to dividend income. It allowed me to retire at age 55. Today I get 5K a month from my investements.

Beitasitmaybe

I’m buying a basket of ETFs: SPMO VOO VXUS SCHD IDVO QDVO

PutItOnTheRitz

Interesting how often dividend ETFs came up in the last thread. Anyone here rotating into SCHD or JEPI specifically?

WinterIsCoooming

The concept of Acorns sounds nice but the fees are pretty bad. Especially if you only plan to invest your "change". You are better off opening up a brokerage account at Robinhood, Schwab, whatever. Robinhood has a nice UI for beginners / if you plan to just buy and hold or mess around with some options. If you don't know what to invest in, start with some ETFs /index funds. SPY, SPYD, SCHD if you like dividends

euphoriatakingover

Top 3 as in what's our top 3 as in most shares or 3 favourites? My favourites Alibaba 7.09% (% of total portfolio) Pepsi 5.34% Realty income corp 8.53% Though I have most of portfolio in SCHD (24%)

No-Establishment8457

So the majority of my portfolio is in broad index funds: VOO, SCHD, DGRO. I augment income with dividend-paying stocks. For me, that's a necessity, not an option. I am usually within a % or 2,3 of the S&P 500. Even on some years, I might be ahead.

Historical_Low4458

VFIFX, SCHD, and VTI are my top three funds.

Chubbyman9029

VOO for my taxable account, VFIAX for my 401(k) and HSA because VOO isn't available. If I had more to contribute, I'd do VGT and VTI. SCHD is also good but I'm prioritizing growth right now.

zeebo1980

I do Sp 500 SCHD and momentum for defense and New gold just because Igold has been going up year by year ! I been investing 15 years ! I pick up the Jp morgan 2 years ago ! I think ima retire in the next 5 years and just live off the dividend ! My 401k is good Sonos the Roth IRA ! My job curentlly is pissing me off looking for a reason to get fired !

Egnatsu50

Minimal research but my portfolio was heavily tech...   I weened back and was looking at SCHD and VHT.. I still hold some tech stocks and manufacturing. DCA Gold and silver over the last few years as everyone said its garbage... "Can't believe your buying Gold and, its has no growth an is overpriced at $2000 and $22"

srfdriver99

Annuities are a bad idea - it's why there's such a massive industry invested on trying to sell them to people. It's a ripoff. Keep a certain amount in bonds or CDs (fixed-income, but you don't need a SMA). Put the rest in stocks. You need to do the math to figure out how much you need in fixed-income and how much can go in stocks. Keep in mind that having a portion of the stock pile invested in dividend-focused funds such as VIG or SCHD may be a good alternative to generate more income in your retirement without having to sell off shares. If your husband has a pension, and you're going to be drawing on Social Security, the amount you will need to be pulling every month to pay the bills will be lower. You need to write out a budget before you need to be worried about SMAs and other such nonsense. Figure out what the gap is between the pension+social security on the one side and your expenditures on the other. That really _should_ be a reachable number. 600k should generate at least 24k/yr of income ($2k/mo) and the gap really shouldn't be that large. Do not pay for a financial advisor that charges percentage-based fees like 1% a year. Find someone who is a fiduciary that charges based on the actual work they do that will help you structure your retirement and deal with RMDs and so forth.

EasyPeesy_

I'm quite similar right now. Target goals currently are 60% VOO, 20% SCHD, 15% O/JEPQ, and 5% high yield divs. Only have like 6 total holdings with $100k invested. I think tech is still the play. As we progress as a society tech only plays a larger and larger role. Anyway, my strategy is growth into dividends in about 10-15 years for early retirement. Currently 30. I understand the idea behind straight growth and sell off some gains, but since I also own 5 rentals I like the idea that if I can pull enough monthly income I don't necessarily care about growth as much. Pulling $10k/mo in divs is somewhat the same as gaining $120k/yr in growth. This way I'm less worried about market fluctuations and can stay afloat with income that serves the same purpose while also maintaining the underlying position.

PutItOnTheRitz

Solid choices…SCHD and JEPI are two of the most mentioned defensive ETFs I’ve seen lately, so you’re definitely not alone there…I like how they balance yield with some equity upside. Personally, I’ve been leaning more toward individual blue chips for that same stability/dividend combo.

charliekunkel

Yup. Instead of straight index funds like Ive held for decades, I recently switched to target date funds (VFORX) that hold some bonds, dividend ETFs like SCHD and JEPI, and VTWAX. I'm fine holding those for a few years. Maybe forever. The older i get, the more risk averse i become. And if we have a 20%+ drop, I'll switch back to more index funds for a while.

Ok_Association9812

Im looking for some other funds that can provide some income, or growth. The current climate is making me nervous. I have about 30% - SPAXX/CASH , 23%/VOO, 18%/VTI, 9%/SCHD (which is not moving anywhere) 3%/VXUS and about 19% spread around some single equities (NVDA, AVGO etc) . I feel like im missing out on the cash growth/ but its a safety net.. Thoughts?

Individual_Error_471

I’m 21 and a senior in college with \~$10k in an Amex HYSA (3.5% APY) and $3.4k already invested in Robinhood. Thinking about pulling $5k from my HYSA to put into ETFs for long-term growth. Debating between going all-in on VTI/VOO for simplicity or splitting into VTI + VXUS (and maybe SCHD for dividends). For those who started young, what ETF strategy do you recommend?

srfdriver99

Well, for large cap value, VTV exists. So take a gander at this chart: https://totalrealreturns.com/s/VFINX,VYM,VIG,SCHD,VTV Dividend appreciation and the extra criteria SCHD has seem like better strategies than raw value, though there are periods on this chart where VTV is winning. > I tried doing a covered call strategy on my own a few years ago with various degrees of success. I think you need to have pretty good market timing in order for it to be successful- and a pretty good read on macro currents. I don’t believe that an ETF which does a covered call strategy automatically is a winning strategy. Strong agree. I'd be interested in seeing a couple of actively managed covered call ETFs rather than these gimmicky indexed ones. I suspect one that focuses on dividend-paying value companies and intentionally selects dates that avoid earnings spikes could outperform buy and hold (on those stocks, not necessarily the market as a whole).

srfdriver99

Dividend investment would be _far_ better if it wasn't for the tax treatment causing a lot of companies to do share buybacks instead. Unfortunately, buybacks aren't nearly as reliable as dividends (not that dividends are _inherently_ reliable, but a number of companies make it a goal to not cut the dividend or maintain a particular minimum dividend payout) so it's very difficult to do sensible buyback-oriented investing. There are some ETFs that attempt to do this like PKB and DIVB, and [as you can see PKB has not done well.](https://totalrealreturns.com/s/VFINX,VYM,VIG,SCHD,PKB,DIVB) As long as this persists, dividend investing is always going to have returns which are meaningfully divergent from that of the broader market, for good or ill. In a year where tech is taking a bloodbath, the dividend approach will outperform. In a tech boom year, the dividend approach will underperform. (Most of the big tech companies do buybacks rather than dividends, or pay out small dividends compared to how much they do with buybacks.)

ragnaroksunset

> I doubt that but 30/70 has better risk adjusted return than SCHD as well. My guy. You don't have to doubt. You can just check. And it speaks volumes that you don't. >You are missing the point. 100% QQQ has WORSE risk adjusted returns. That is saying there is substantial uncompensated risk. No, it is saying that the risks for 100% QQQ historically materialized, whereas the risk of a comparable portfolio did not necessarily do so. This is one of the many failings of relying on purely historical data to do analysis - in hindsight the chance of history happening the way history happened is 100%, whereas the future is entirely probabilistic. You do not deserve your username.

srfdriver99

Yep, SPYI is terrible, but you should look at something like VYM, VIG, or SCHD for a "traditional" dividend ETF, not the covered-call ETFs. These are just normal ETFs that invest in dividend-paying stocks using some criteria or another. https://totalrealreturns.com/s/VFINX,VYM,VIG,SCHD But as you can see, the max drawdowns are very similar. VYM did a poor job of recovering after the pandemic dip, but the dividend funds outperformed in 2022-2023 before the S&P 500 recovered in 2024. I would argue that these are reasonable selections, unlike the covered call ETFs (jury's still out on the approach taken by XDTE and XDTY).

daily-trader-365

Its has a terrible dividend amount and for the last 3 years has trailed the market. Would be better to stay in VOO and just cash some out when needed or use a more pure dividend play like QQQI. 4% is a money market return and SCHD has no downside resistance , if looking for growth and dividends try QQQH

DaemonTargaryen2024

Yes [https://testfol.io/?s=7uPvYn0Pwkx](https://testfol.io/?s=7uPvYn0Pwkx) * SCHD total return: 402.13% * VOO total return: 577.09% Obviously you'd still make money with SCHD so it's better than nothing, but it's no contest against a broad market fund.

Individual_Error_471

I’m 21 and a senior in college with ~$10k in an Amex HYSA (3.5% APY) and $3.4k already invested in Robinhood. Thinking about pulling $5k from my HYSA to put into ETFs for long-term growth. Debating between going all-in on VTI/VOO for simplicity or splitting into VTI + VXUS (and maybe SCHD for dividends). For those who started young, what ETF strategy do you recommend?

Soft_Ear939

I’ve got a mix of VOO, SCHD, QQQ and about 10% in the typical tech stocks. QQQ always drops the most, SCHD is usually pretty mild. Quarterly rebalance helps you come out ahead in the end

DaemonTargaryen2024

Precisely, SCHD is not appropriate for someone in their accumulation phase

Sandyrandy54

The big 7 are increasing earnings every quarter so I don't think its at that stage yet. I wanna keep one foot in as long as I can. If I put everything into SCHD, VT and BND now and it doesn't pop for more than two years its probably not worth it.

StatisticalMan

>Start it in 1999 (pre-tech-bubble crash) rather than 1971, because by 1999 your graphs already show a divergence. Then SP500 beats it. Vanguard VVIAX value fund ties the 3-fund portfolio but not SP500 (this is the oldest Vanguard value fund I could find). The S&P 500 does beat it but the 3 fund portfolio had a better RISK ADJUSTED RETURN. Changing the start date to 1999 doesn't change that. The point was you can reduce risk/volatility over S&P 500. It isn't S&P 500 or high dividend fund. There are options which do improve risk adjusted returns it just turns out high dividend funds are shit at it. >SCHD "or any value fund". SCHD is not a value fund. It is a high dividend fund. The irony of quoting BRK-B despite it having a lifetime dividend of zero. BRK-B would not be found in SCHD, VYM, or any high dividend fund. So going back full circle to the beginning. **Picking stocks/MF/ETFS based on the amount of the dividend is dubious.**

StrategicVictor

I think it could be done if the stock has liquid options and if you want to buy another stock with the proceeds. Sort of a "transfer" of low cost basis. This is how: you could sell puts with the highest strike available and earliest expiration, let's say 120 for this case, sell enough to offset the gains when you are assigned. After you are assigned, you can sell the whole position offsetting the gains on the stock but generating the gains with options. Then you buy deep in the money calls for the position you want to enter. Let's say the stock is trading at 100, you can usually get calls with strike of 50 or even 30. You the exercise the calls and get the stock for 30, generating the losses on the options to offset the previous gains. There is usually no premium for deep in the money options, so you have to only watch the spread. Until you sell the new position - no taxes. In my country if you hold for 15 years there is no capital gains tax. You can do this with an etf like SCHD also.

VeryStableGenius

> To be clear a boglehead 3 fund portfolio did fine throughout both the 2000 and 2008 crash. Start it in 1999 (pre-tech-bubble crash) rather than 1971, because by 1999 your graphs already show a divergence. Then SP500 beats it. Vanguard VVIAX value fund ties the 3-fund portfolio but not SP500 (this is the oldest Vanguard value fund I could find). However, BRK-B totally kicks all of them. No contest. x12 for BRK-B vs x7.7 for SP500, and x6 for 3-fund and VVIAX. Same if you go back to 1990, pre-bubble. > Then this is just faith. You might as well say my religion requires me to buy SCHD to be faithful. SCHD "or any value fund". Fact is that the broad market has a PE approaching 27 (SPY) and 36 (NASDAQ), and value funds (and BRK-B) have PE below 20. What the victory of BRK-B might show is the value of getting out of the market, then getting back in, over a static stock/bond allocation.

Overlord1317

/r/valueinvesting and /r/dividends are for entertainmenr purposes. People out there recommending SCHD.

StatisticalMan

>I think that by looking at a broad index for your various diversified packages, a lot of what you're capturing is market concentration in a tiny set of tech stocks, combined with their huge success. The magnificent 7 is 18% of VT combined. There are no other holdings that are even 1%. In the hypothetical 75/25 portfolio (which outperformed VYM and SCHD over the life of the funds) that would be diluted 25%. so in a Bogle 3 fund portfolio with 25% bond exposure the magnificent 7 make up 13% of the portfolio value. To be clear a boglehead 3 fund portfolio did fine throughout both the 2000 and 2008 crash. I am not limited in data on that just on an "acceptable" high dividend fund. https://testfol.io/?s=0CvnF71W7Nd Adding international stocks, small cap stocks, and bonds improves risk adjusted return compared to S&P 500. Yes nominal returns are lower but in exchange for lower drawdowns and volatility. Every known high dividend fund WORSEN risk adjusted return. So yes there are options to reduce drawdowns and volatilities it just turns out high dividend stocks are shit at it. > If you think we're in is a high risk bubble, it's a bad bet, and VYM, SCHD, or any value fund might be better despite lower past returns. Then this is just faith. You might as well say my religion requires me to buy SCHD to be faithful.

VeryStableGenius

I think that by looking at a broad index for your various diversified packages, a lot of what you're capturing is market concentration in a tiny set of tech stocks, combined with their huge success. Most of the growth excess was in those stocks. If you think this is representative for the future, your plots might point to the way to a good strategy. If you think we're in is a high risk bubble, it's a bad bet, and VYM, SCHD, or any value fund might be better despite lower past returns. I don't think I'll be persuaded that putting 2% of my stock investments into TSLA and 8% in NVDA is smart on value, though it might continue to be successful on herd-investing grounds. There's a long-tail risk that backtesting doesn't capture. I was around for the 2000 crash, and I remember people's feeling of safety ("It can't go down; where else will retirees put their money?"). Incidentally, put BRK-B into your backtester - it trounces *everything*, despite avoiding many of the big-cap meme stocks. And it is essentially your Boglehead strategy, but with an twist: you have smart people doing market timing for you, shifting between stocks to bonds based on perceived underlying value. During the 2000 crash, it was relatively unscathed compared to the indices. Today, it is 65/35 blend of value stocks and private holdings, and bonds.

DaemonTargaryen2024

A dividend fund like SCHD has underperformed the S&P 500 since SCHD’s inception.

VeryStableGenius

> I don't me YOLO be as stupidly aggressive as you can. I understand, but the main way you can shift away from dividends is via growth stocks. I don't think there is a region of investment space that is "value stocks with ultra-low dividends." Well, maybe BRK-B, which has the flexibility to get out of the market altogether. > Imagine moving $2M into a proper diversified portfolio of equities and bonds (not QQQ or SCHD). Both QQQ and SCHD are diversified. QQQ and SPY are the paradigms of diversity, yet they're also loaded with high risk stocks that dominate market cap, produced most of the returns, and have the highest risk of collapsing. Bonds are usually money losers after taxes. At current high rates, they barely break even unless held in a tax-deferred account (5% yield, taxed at 30%, yielding 3.5%, then subtract 2.5-3%% inflation and get 0.5-1% real return). > SCHD max drawdown is essentially identical to VTI. I'm looking at your graphs. Thanks for putting the work in. SCHD is hard to backtest to the real dark periods of investing because it started in 2011, avoiding the two killer crashes of modern times. So your entire plot covers a very happy era of the market, except for the brief interruption of covid. And deep in this era, we're sitting at high valuations (PE for SCHD is 17, which is sane; PE for VTI is 26). To cover a longer span, one would probably need to generate one's own portfolio of dividend stocks using some some simple rules for picking from the broader SP500.

StatisticalMan

>SCHD & VYM annualized 10 year return has been 9.3% while SPY was 13.5% and QQQ was 14.2%. Over a five year span SCHD and VYM look relatively better (13% return, vs 13.8% for QQQ). On the other hand, Nasdaq (pre-QQQ) was so brutally ravaged in 2000 that it took until 2018 to get your real dollars back (2015 or 2016 in nominal dollars). If you had retired on QQQ in 2000, you'd likely be dead before breaking even, slowly cashing out your retirement at a loss. I think you misunderstood what I meant. I don't me YOLO be as stupidly aggressive as you can. By all that matters is total I mean 10% total return is 10% total return. 10% capital gains and 0% dividends is 10% total return, as is 8.5% capital gains and 1.5% dividends or 5% capital gains and 5% dividends. >Imagine moving $2M of non-401K money into dividend stocks at the age of 62 Imagine moving $2M into a proper diversified portfolio of equities and bonds (not QQQ or SCHD).

VeryStableGenius

> All that matters is total return. SCHD & VYM annualized 10 year return has been 9.3% while SPY was 13.5% and QQQ was 14.2%. Over a five year span SCHD and VYM look relatively better (13% return, vs 13.8$ for QQQ). On the other hand, Nasdaq (pre-QQQ) was so brutally ravaged in 2000 that it took until 2018 to get your real dollars back (2015 or 2016 in nominal dollars). If you had retired on QQQ in 2000, you'd likely be dead before breaking even, slowly cashing out your retirement at a loss. > forced annual taxation on money you don't need and will just reinvest anyways. Zero tax for married couple making less than $94,000, then 15% up to $583,000. This might be a tolerable hit. Imagine moving $2M of non-401K money into dividend stocks at the age of 62, for an annual income of $80K, plus an expected appreciation/income growth of 5%. Your Social Security would push *some* of this into the modest 15% bracket. However, if you had a growth fund instead, then cashing out would be subject to comparable cap gains tax. Dividends are likelier than stock values to hold steady in a downturn, so you're less likely to have to dig into depreciated capital. > To be clear that is not allowed in the US but I would love a VOO/VTI l Sounds like you might want some BRK-B. > However to intentionally pick stocks/MF/ETFS based on the size of the dividend is dubious. The increase in tax drag makes it even more so. Most value funds seem to have paid returns the same 5 and 10 year returns as SCHD and VYM (while paying about 2% dividend). So dividend funds are essentially value funds, so by your argument, if you don't want the income, SCHD and VTV are interchangeable, minus *slightly* smaller tax hit for VTV (2% dividend, not 3.9%). When they deliver 7% *real* growth, pay something like 3% in dividends, which is taxed at 15%, then the total tax hit on returns is 1/10 of the 7% real return, or 0.7%. That might be an acceptable factor for somebody who believes that growth stocks (eg, QQQ) can suffer punishing two-decade crashes like in 2000.

Nickanator8

How is SCHD not an income play? It's THE dividend ETF people who are in that space talk about, kind of how most people looking for investment advice in this sub are told to buy VOO and forget about it for 30 years.

Sorry_District_329

Appreciate the tip — UTG does look solid for income, though as a CEF it’s a bit different from ETFs like VOO/SCHD (leverage + premium/discount to NAV). I’d see it more as an income satellite, while keeping VOO as the core.

daily-trader-365

First SCHD is not a income play. Also keep it in IRA and only pay taxes on the money you withdraw out of the account.

BrewerCollie

You won't have to pay taxes as long as you don't move the cash out of the account. So you will sell VOO, move to a cash position like Fidelity's SPAXX, and then buy SCHD. The money never left the brokerage/retirement account and, because it never hit your bank account, you owe no taxes.

SirGlass

Well if you concentrate on dividends I have two points a) Its still not much less risky , in covid drop VOO dropped 34% everyone darling SCHD drooped 33%, A 100% dividend portfolio is probably still too risky for most people in retirement they will need to add bonds because dividend paying stocks are still risky . b) A focus on dividends will leave you concentrated on less stocks SCHD holds approx 100 stocks and is overweight in energy and consumer staples This in itself adds risk because its concentrated in a less companies and a few sectors, the energy sector has a bad decade thats a risk So I would argue if you really want to reduce risk, buy broad market index funds that will hold 3000+ companies across sectors and will hold value / dividend / growth and put an allocation into bonds is the better way to get risk adjusted returns and protect your portfolio from a draw down

lufisraccoon

*the methodology clearly holds some water.* I'm not all that opposed to dividend investing - I think it gives strong psychological benefits for a lot of people. I'm more worried about people who think that the "stability" of dividend funds is particularly strong. By both of our numbers, it isn't particularly strong (especially varying by date and market cycle). On the flip side, I've heard of a number of investors trying to use dividend stocks as bond proxies, thinking they're adding meaningful stability to their portfolio. Objectively, they aren't, even if there are mild benefits to dividend investing. *You can say "lower risk adjusted return", and thats true after 2023, and it will likely be true for all time since its not the multi-factor efficient market cap weight, but that argument is only true post AI boom. \[...\] with history back to 1993, the methodology clearly holds some water.* At the risk of being snarky, this combination seems to imply that any outperformance (on a risk adjusted basis) was only in the past and may not persist. I don't really have a strong opinion here, and I understand an appeal to investing in "strong" companies (via SCHD/Dow Jones-100 style investing). That said, all these past comparisons are conflated with fundamentally different market mechanics. In 1993, trades may easily have had 1.0% commissions. Even in 2000, trades may easily have had $10-$20 commissions, even at low cost brokerages. That cost justifies a potential premium for dividend stocks, but that cost no longer exists.

StatisticalMan

>You know Vanguard has updated their recommended mix to 70/30, right? And it's not 70/30 equity/income - it's income/equity. I doubt that but 30/70 has better risk adjusted return than SCHD as well. That is the entire point. Accepting a lower return for lower risk. If you are getting a lower return without a reduction in risk you are just getting less for nothing. >I'm not the one leaning on risk-adjusted returns. You are missing the point. 100% QQQ has WORSE risk adjusted returns. That is saying there is substantial uncompensated risk. It doesn't have better risk adjusted returns. In fact no equity fund has better risk adjusted returns than a mix of equities and bonds. https://testfol.io/?s=17hwnLc6ryk Do you not get the concept. Comparing a 100/0 portfolio to an 85/15 portfolio. The 85/15 portfolio has a lower NOMINAL RETURN. That is fully expected given the historical return of bonds is lower than stocks. However 85/15 has a HIGHER risk adjusted return. Accepting less return improved risk. In fact a 60/40 portfolio has an EVEN HIGHER risk adjusted return. SCHD on the other hand has worse return AND worse risk.

ragnaroksunset

>SCHD has higher risk despite lower returns than 85/15. That means it is the inferior option. No. It means you are over-stating the risk. >Also there is no "eliminate all risk" that is nonsense. My guy. When you compute the risk-adjusted return, you are calculating what the equivalent return would be if the portfolio were risk-free. That is *explicitly* what you do when calculating the Sharpe ratio, and is thematically what you're trying to do when using other means of performing this analysis. Wanton application of math is dangerous.

ragnaroksunset

> Otherwise might as well YOLO it into 100% leverage QQQ fund. I'm not the one leaning on risk-adjusted returns. You are. And in doing so you are explicitly trying to make positions equal. You are doing it imperfectly because of the lack of information about the risks inherent to the compared positions - such lack differing between them, leading to different risk-adjusted returns. >Of course but simply pretending the future risk of SCHD is better than a mixed equity and bond portfolio in absence of all actual **historical** evidence isn't investing it is a religion. You know Vanguard has updated their recommended mix to 70/30, right? And it's not 70/30 equity/income - it's income/equity. Your historical model is absolutely shattered. >If you are saying there is no evidence that SCHD has a better risk adjusted return but you just "know" it will be better in the future that is a religion: the church of the dividend. I am saying you have to do the hard work of thinking about what the future risk of your position is going to be, because *that* is the risk you are being compensated for. You aren't doing that. You're letting someone else's statistical tool do your thinking for you.

StatisticalMan

>If after adjusting for risk you still find excess return, you did not eliminate all risk. Exactly. SCHD has higher risk despite lower returns than 85/15. That means it is the inferior option. Also there is no "eliminate all risk" that is nonsense. Every investment has risks. Even t-bills. The US could cease to exist tomorrow. Even gold. A gold asteroid could hit China flooding gigatons of gold on the market. There is no eliminate risk. High dividends don't elimitnate risk. There accepting lower (but non-zero) risk for lower returns. THAT IS THE ENTIRE POINT OF RISK ADJUSTED RETURNS. Did picking X over Y give me lower risk in exchange for lower returns. If it did not then I just got lower returns for nothing.

rayb320

My 4% SCHD return is great when I see this

StatisticalMan

>If, abstracting from fees, one position has a higher risk-adjusted return than the other, you are wrong about the risk of one or both positions. No you are not. Not all investments are equal. Otherwise might as well YOLO it into 100% leverage QQQ fund. >Do you just not think about what the future risk of your positions will be? Of course but simply pretending the future risk of SCHD is better than a mixed equity and bond portfolio in absence of all actual evidence isn't investing it is a religion. You can't simply say high dividends will be lower risk in the future because I declare it. The only modeling we can do is based on historical returns. It doesn't mean the future will be exactly the same but it is all we have other than faith. If you are saying there is no evidence that SCHD has a better risk adjusted return but you just "know" it will be better in the future that is a religion: the church of the dividend.

StatisticalMan

No it it not. A 60/40 portfolio is low risk and has a better risk adjusted return than a high dividend portfolio. Risk adjusted return is metric that says for a given risk I want the maximum return FOR THAT LEVEL OF RISK. IF SCHD has worse higher risk AND worse return than 85/15 portfolio what is the advantage? None. It isn't a simply worse for nothing. IF SCHD WAS BETTER then despite a lower NOMINAL RETURN it should have a HIGHER RISK ADJUSTED RETURN. Risk adjusted returns are the exact opposite of what you claim. **It is about saying I want a bit less risk what if the best return I can get for this level of risk.** If you want maximum return regardless of risk well that will always be 100% equities we don't need risk adjusted returns to tell us that.

hereforyouanytime

Solid structure — I like the idea of having a 2–3 year bond/SGOV bucket to avoid selling in a downturn. That’s a smart way to smooth cash flow. I’m not retired yet, but I’ve been studying withdrawal strategies, and what I’ve seen from retirees who share their setups is: * Keep **2–3 years of expenses** in short-term bonds/treasuries. * Let equities (VOO/VONG/etc.) grow untouched unless you need to rebalance. * Some use **dividend ETFs** (SCHD, VYM) for a baseline income stream, but most still rely on total return + planned sales. * International exposure helps, but many retirees keep it light (5–15%). Seems like the key is less about chasing yield and more about keeping enough safe assets to sleep at night while equities do their long-term job. Curious for those already retired here: do you lean more toward dividends for peace of mind, or stick with total return + bond bucket strategy

StatisticalMan

You can create any level of risk by using equities and bonds. Yes someone likely shouldn't be 100% equities in retirement. However 80% equities and 20% bonds might be suitable. So the question is does a high dividend fund have a better risk adjusted return for any reasonable equity/bond allocation and the answer is no. If you aren't getting a better risk adjusted return for a given level of risk you are simply getting less for nothing. Comparing SCHD to VTI and IEF (intermediate treasuries treasuries) in a 60/40, 75/25, 85/15, and 100/0 portfolio https://testfol.io/?s=17hwnLc6ryk SCHD has the worst risk adjusted return. However specifically comparing to 85/15 which is the closest level of risk/volatility SCHD has a WORSE annualized return BUT also a WORSE max drawdown WORSE volatility, and WORSE risk adjusted return. It is just all around worse. If someone can't handle the volatility of 100% VTI then 85/15 is better than SCHD in every possible metric. IF they want even LESS risk (and accepting less return) then every combination of VTI and IEF has better risk adjusted return than SCHD.

AICHEngineer

Looking at SCHD vs VOO during any crash other than the (at the time) apocalyptic pandemic (dot com, GFC, 2015, 2022) i would argue that the methodology employed is ~10% less "risky". (And yes, you can backtest back to 93' if you use PRDGX, the OG dividend growth fund) Pandemic was a true dark horse. Still, i dont advocate hedging stocks with stocks. Id hedge with alts. But if someone is willing to accept slightly lower expected returns for slightly lower volatility and drawdowns, it seems to be a valid strategy over the decades.

thebeastiestmeat

it depends what you consider a decent amount. 300k invested in SCHD today won't give you a decent amount unless you live somewhere where the average monthly income is around $500. 300k in SCHD today is around 900 a month. Dividends are worth it if you have the capital and have a low risk tolerance. Companies that pay out dividends sacrifice risk and growth, so if you invest in something like SCHD, you'll be making around 3.5% dividend (around $1/share annually) + around 7% annual growth vs SP500 which has around 13% growth rate on average. If you invested 300k in SCHD 5 years ago, you would have made a total of $68.7k in dividends (before taxes) and have a portfolio worth $430k. If you invested 300k in an accumulating ETF like VUAA 5 years ago, you wouldn't have any dividends, but you would have had a portfolio worth around $600k

AICHEngineer

What we *observe* is that SCHD has had lower volatility, and a not insignificant lower MDD in the GFC and 2022 and dot com (though its methodology was backtested over the 1999-2011 period specifically for its formulation, so no wonder it looked better then, it was made for it). Having lower debt exposure just implies lower systemic risk, so I would assume there would be a lower return involved. You can say "lower risk adjusted return", and thats true after 2023, and it will likely be true for all time since its not the multi-factor efficient market cap weight, but that argument is only true post AI boom. Before that, it had market returns for lower vol. PRDGX being a better stand in for a better dividend growth fund with history back to 1993, the methodology clearly holds *some* water. I am God's No. 1 dividend psychology hater, dont gotta sell me, but going "Aha! Better risk adjusted returns now!" Is the same as the SCHD investor 3 years ago says "Aha! Better risk adjusted returns now!" Because that was true then.

SirGlass

Looking at SCHD vs VOO during the covid crash of 2020 SCHD fell about 33% where as VOO fell about 34% from their 2020 highs So while you can argue its more stable, its still equities and will swing with the market. I would argue it does not really offer that much more stability to care about

lufisraccoon

To the contrary, SCHD has had *lower* risk adjusted returns than the broader US stock market. If an investor desires lower volatility, historically she would have been better served by a blend of cash or bonds and a non dividend focused index fund.

AICHEngineer

I'd argue against that. Dividend etfs arent "typically stable". Dont confuse SCHD for being some monolithic representation of "dividend" etf style. SCHD specifically has additional requirements, like they wont invest in companies with high debt to equity. They specifically invest in less sus debted companies, which is why SCHD is a bit more stable than market average.

OptionsJive

SCHD

InvisibleEar

SCHD is stupid because it has such a small number of holdings. Buy VYM

cdude

That's one year. Since 2022, QQQ is up like 46% while SCHD is up 16%. Over 30 years you'll be losing out on *a lot* more. It makes no sense to hold a high growth asset while also holding a lower growth assets to "balance it out", that doesn't make sense, they don't have inverse correlation. If you believe in high growth then why not hold all of it? This obsession with "more shares" means you fell for the dividend trap, because you don't understand how dividends work. You're starting your journey with the wrong ideas. This explains a lot on how you lost money trading. That's on-brand for people who jumped straight into option trading with zero investing experience.

leaning_on_a_wheel

Why do you like dividends? Unless you’re retirement age you’d be better off with more SCHG or VT. You’ll miss out on a lot of growth with SCHD

lovesToClap

ChatGPT told me to buy SCHD calls for $30 last year expiring this September. As you can see, SCHD is nowhere close to $30. 🤣

comeBeAStar

I bought some SPY few years ago, got some SCHD over more recent years. Apple before they did their last split lol, so I’ve wised up some. Those two have just been lingering and really evaluating everything as I need to get more focused.

Akisu30

I like it.Just don't panic and don't sell it in few years if the market is down.Tech stocks will be great in 15 years. I'm thinking of front-loading $250k now, $100k next year, then $35k a year. Mostly Big Tech(Amz, Apple ,Google, Nvidia, Microsoft + S&P + SCHD, with JEPI/VYMI for dividends and some international balance. Everything reinvested, ignore the daily swings. If history rhymes, that's ~$4 to 6M in 20 years. People will say to just say to put in QQQ,VOO or S&P and forget it.But I would say just ignore it.If you are employed and in 20’s/30’s don't forget to maximize your 401k and if you have kids have 529 apart from tech heavy stocks.

Akisu30

I like it.Just don’t panic and don’t sell it in few years if the market is down.They will be great in 15 years. I’m thinking of front-loading $250k now, $100k next year, then $35k a year. Mostly Big Tech(Amz,Apple ,Google,Nvidia,Microsoft + S&P + SCHD, with JEPI/VYMI for dividends and some international balance. Everything reinvested, ignore the daily swings. If history rhymes, that’s ~$4 to 6M in 20 years.People will say to just say to put in QQQ or S&P and forget it.But I would say just ignore it.If you are employed don’t forget to maximize your 401k and if you have kids have 529.

2Bit_Dev

QQQ might not have higher growth in the future. QQQ and the S&P 500 ETFs have significant holdings in the magnificent 7 (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla). QQQ has an even stronger concentration in them than something like SPY. Now, a lot of people are speculating that we are in the middle of an AI bubble. Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia are significantly involved in AI, so if the AI bubble bursts QQQ will probably shoot way down in value compared to an S&P 500 ETF. That's something to think about. I'm still somewhat relatively new to stocks, but I'd do some research on the different ETFs out there. There are dividend paying ETFs like SCHD. There are also ETFs that are concentrated in different industries like healthcare, industrial, and finance. Its my opinion that that there isn't one ETF that will provide enough diversification. In my opinion, I don't feel comfortable buying a share of QQQ knowing that 10% is tied to Nvidia.

Bane68

Way overvalued stock. Their cash flow and revenue growth has been slowing for some time now. You’re better off getting exposure to it through something like SCHD.

Extension_Tutor9281

Yeah you’re right I think that’s also another reason I have SCHD and JEPQ recurring investing on and drop that way by the time I am close to retirement I’ll also have that.