Heads up SCHD VS VDY

Hello all first off just want to say I’m sorry about the lack of post last week, I’ve been a little under the weather and have had a ton going on lately. My goal was to post 50 articles this year so I at least I still have a buffer. Enough about me time to dig in!

VDY

Vanguard FTSE Canadian High Dividend Yield Index ETF

Listed on the TSX, VDY is a market weighted ETF that seeks to track the performance of the FTSE index and is therefore passively managed. It has a nice low (for the canadian market at least 0.22%). It also pays dividends monthly instead of quarterly which is nice to either get the money compounding on itself quicker or if you are taking it out as cash it gives you peace of mind.

Holdings wise since it is market weighted we see a very top heavy holdings list. THe top 10 holdings make up 66% of the fund leaving only 34% left for the remaining 48 securities. Since it is Canadian based it is no surprise that every holding in there is either Financial or Energy.

Over the past 3 years we are looking at a 75% return and over 10 years VDY has returned 173%. Pretty amazing numbers all around especially considering this is the Canadian market!

SCHD

Schwab U.S. Dividend Equity ETF

Listed on the NYSE, SCHD tracks the Dow Jones US Dividend 100 Index. SCHD is market weighted, but, it follows a very specific reconstitution process once a year on the third week of March. I won’t go to into it as I already have an article about it.

Currently there are 103 companies so this is about twice as diverse as VDY. Also the top 10 holdings add up to about 40% far less than the 66% of VDYs. SCHD has one other big leg up and that is a nice and ultra low 0.06% MER only 1/4 of VDYs/

Looking over the past 3 years the return was 32.64%. Now on most other 3 year periods this would have been a fantastic return, but, the past 3 years have not been your average years. Zooming out a 10 year gain of 188.77% is quite a ways above VDY’s.

My Thoughts

While I hold both ETFs and hold more VDY than SCHD I believe they are both fantastic. SHCD is definitely lagging over the short term, however, Jordan Powell’s commentary on Friday has the markets predicting a 89% chance of a rate cut come September. VDY being Canadian has had the benefit of the Bank of Canada cutting rates over the past year which inevitably has investors move money out of CDs, GICs and HISAs looking for a higher percentage. Now it should be SCHD’s time to shine and even if it isn’t it will be here one day!

Wrap Up

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Cheers ☕