3 Dividend ETFs Outperforming SCHD in 2025
Dividend exchange-traded funds (ETFs) have drawn increased investor interest in 2025, as many seek stable passive income amid market unpredictability. While the Schwab US Dividend Equity ETF (SCHD) has been a popular choice for dividend investors, its performance this year has lagged behind some worthy alternatives. With limited technology sector exposure, SCHD returned a modest 0.73% in 2025, missing out on a robust tech rally.
For investors focused on both income and growth, three dividend ETFs stand out as superior options to SCHD: the Vanguard Dividend Appreciation ETF (VIG), the Vanguard High Dividend Yield ETF (VYM), and the JPMorgan Equity Premium Income ETF (JEPI). Here’s a closer look at each.
Vanguard Dividend Appreciation ETF (VIG)
VIG offers a compelling choice for income investors looking for a blend of dividend income and capital appreciation. Although its current yield is lower at 1.57%, VIG gained an impressive 13.22% in 2025, driven by its significant allocation to technology stocks—27.80% of its portfolio.
This ETF holds 338 stocks, including household names like Broadcom, Eli Lilly, Johnson & Johnson, Walmart, and Visa. These companies have a strong track record of consistently increasing dividends for over a decade, reflecting their financial stability and competitive advantages.
With an expense ratio of just 0.05% and assets under management (AUM) of $101.8 billion, VIG offers investors broad diversification. It has delivered a cumulative 3-year return of 48.47% and a 5-year return of 76.50%, outperforming SCHD’s comparable 5-year return of 54%. Considering its blend of income and growth, VIG is an excellent long-term dividend ETF.
Vanguard High Dividend Yield ETF (VYM)
Another Vanguard fund, VYM, focuses on stocks with higher-than-average dividend yields, targeting income investors who prioritize steady cash flow. VYM yields 2.39% and has generated a strong 12.38% return so far in 2025. VYM holds over 500 stocks, providing wide diversification with a limited exposure risk to any single company. Its portfolio is weighted heavily in financials (21%), followed by technology (14.30%) and industrials (12.90%). Top holdings include Johnson & Johnson, Walmart, Cisco Systems, Home Depot, Broadcom, and Bank of America.
This ETF has an expense ratio of 0.06% and manages $84.6 billion in assets. Historically, it has delivered a 3-year cumulative return of 40.51% and an outstanding 5-year return of 89.08%. With annualized returns of 12% over three years and 11.28% over the past decade, VYM offers remarkable total returns coupled with a respectable dividend yield—bettering SCHD’s overall performance despite a slightly lower yield.
JPMorgan Equity Premium Income ETF (JEPI)
Managed by JPMorgan, JEPI is distinct in its strategy and is popular among investors seeking high income with lower volatility. The ETF offers a robust yield of 8.21%, paid monthly, which is more than double SCHD’s 3.83%.
JEPI constructs a portfolio of low-volatility, defensive stocks, combining it with an options overlay strategy—primarily selling out-of-the-money call options on the S&P 500 Index. This approach generates additional income through premiums, though it limits the potential for significant capital appreciation.
The fund holds 124 stocks with prominent allocations in technology (15.5%), healthcare (12.3%), and financials (11.6%). Its top holdings include dividend stalwarts like Johnson & Johnson, AbbVie, Visa, Mastercard, as well as tech giants Apple, Microsoft, and Alphabet.
With $57.54 per share, JEPI has remained flat in 2025, but boasts a solid cumulative 3-year return of 30.89% and a 5-year return of 60.32%. Its high monthly income distribution makes it particularly attractive for retirees or income-focused investors who prioritize cash flow over growth.
Summary: Beyond SCHD for 2025 and Retirement Income
While SCHD remains a solid dividend ETF with a reliable yield, its lack of technology sector exposure has capped its performance in 2025. For those seeking enhanced total returns and income, VIG and VYM provide attractive growth and diversification opportunities with moderate yields. JEPI, meanwhile, stands out for investors prioritizing high monthly income through dividend payouts supplemented by an options strategy.
Investors focused on building steady retirement income streams should consider these ETFs as alternatives to SCHD, balancing capital appreciation and monthly passive income effectively in today’s evolving market.
Article by Vandita Jadeja, published 23 hours ago on 24/7 Wall St.
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