Hey Josh! That is incredible. I'll add, and this depends on your goals and situation, you'll likely want a nice balance of growth ETFs as well for your journey. Lately, SCHD has been a drag on the returns, and thus buying more has been a smart (long-term) move. If you have growth ETFs like QQQM, SCHG, VUG, VGT, etc they will have carried the load lately. But eventually the script will flip and SCHD will be the hero. It's nice to always have a balance over many years or even decades and to stay the course.
Amen! I think people quickly forget about what happened just a short time ago. It takes going through a crash, and it will get worse than 2022, to realize that drops hurt compound at a disproportional level. For example, a 50% drop turns $1,000,000 into $500,000. Then a 50% gain gets it back to $750,000. We need 100% to get back to where we started. Also, never panic sell during said drop (: I also agree with your other comment for Josh. Balance is key!
Very nice! It's not always the sexiest ETF out there, but it flat out gets the job done when we zoom out. I think you'll be a happy camper by adding to SCHD over many years/decades.
Hey Kent. I appreciate your consistent support and for being a part of this great community. I'm glad you found the channel, and I look forward to learning more together in the future.
Hey Brianna! I go to get my coffee, refresh to look for new member comments, and boom, there you are! Thank you so much for your AMAZING support of the channel. It was an awesome year and I wish you nothing but the best in 2025!
You nailed it Alex. All about a balanced approach. It beat VOO in its first 11 years on total returns, which isn't the point of it and all the more impressive, but then it fell short the past couple years. Now the haters are out in full force. We will revert to the mean and then all of the *I told you so* growth haters will be telling me why VGT is so horrible (: I will always balance value and growth to compound the wealth over time.
I think you sealed the deal with the statement "schd has very little overlap with the rest of portfolio". We as investers tend to focus on "the now" and not "the goal". In a three fund portfolio, each part plays a role; growth, core value and income stability. For me, I choose to stay the course with SCHD. It does its job in my IRA that i can't add to. When dividends pay out, i can rebalance my IRA without selling anything, mostly. This is helpful, productive and a great option to bonds which don't appear to hold their value these days. Thanks again for the vid. Keep churning out the material and I'll keep the Kapow Chop on the like button.
Haha, thanks Roy! I appreciate your support of the channel throughout its first full year. It makes this stuff a lot more fun to produce. Being a channel member goes above and beyond, but the consistent (great) comments are much appreciated. SCHD gets a lot of haters because of the 'bad' total returns in the past few years. But within the portfolio, to your point, we have our growth carrying the load lately. We will have a new flock of growth hater / 'I told you so' guys when VGT falls face first. These will be different people and the other haters will slowly fade to the background. But at that point, we will have SCHD stabilizing the portfolio. I think these people should buy VOO and focus on other areas of life. The bottom line is that we will always have coverage with a solid mix of stocks and/or ETFs. Hating is easier, and they will always trickle in, but I can almost guarantee that most of the haters do *not* have a balanced portfolio, or a deep understanding, of this stuff. I've noticed, over the years, and this isn't exclusive to investing, people that are learning, growing, and working on life balance don't have time, or desire, to drop negative comments. Now I'm all for constructive criticism all the time. But it's easy to sniff out the difference (:
Hey Ken. Great question! I only own SCHD out of these ETFs. This is because I'm very tech heavy in VGT and hold VOO as well. The lack of tech is what I *need* with my dividend / value side. In a world where I could only hold dividend growth ETFs from this video, I would *not* go 100% SCHD. I would do a mix of VIG + DGRO + SCHD. VYM would not make the cut, but it is a good benchmark ETF to throw in.
@@JeffTeeples very interesting. I am thinking of holding off on tech/growth for now and getting some dividend stuff like SCHD. I have a SEP IRA w/money on sidelines in money market waiting to be invested but am wondering if I should do it in an old Roth account or start anew Roth account. JEPQ non qualified dividends are still tax deferred in a SEP IRA right? The only difference is that in retirement you’ll have to pay regular tax rates on all income if not held in a Roth? The long term cap gain rate would only apply in a taxable account? I’d rather just add SCHD and JEPQ to my SEP IRA but am going in circles about if I should house them there.
It has little.overlap.because there's only like 100 holdings. Half of it is in the S&P. One thing a lot of people don't realize...when you.hold SCHD along with a growth ETF like SCHG, QQQ, VGT, whatever....you basically end up with an allocation that will equal VOO for your large caps
@ I’ve heard others speak of this I did not understand why I needed or not needed to pay attention to this, but seeing your chart with your simple explanation made it easier to make decisions about my Roth. I’m in my 50’s I began a Roth a few years ago, I selected stocks and etfs and it was slow going…(of course I was thinking well you don’t know what to select or not select), but I’m feeling frustrated and concerned I won’t have enough for retirement. It’s difficult to be able to add $100k with the small income I make, in fact I have hard time achieving $8k limit for Roth. With that said when I change jobs I was thinking of rolling over my 401k $7k to my Roth & would like add to my portfolio and was thinking of adding JEPQ. I’ve thought about SCHD, SCHG, but I don’t have 30 years & I’m not starting at $100k & watch it grow. JEPQ has higher dividends, but has qualified and ordinary dividends, which could mean higher taxes, but if it’s in a Roth that would mean tax free, I believe it’s good to add now because I’m older, I think…I usually reinvest my securities, but I don’t think I can with JEPQ so maybe I can buy more shares of JEPQ or add another etf. I’m trying to figure out what’s best for me so I’ve been watching videos & yours, along with others are helpful. Have any thoughts with me adding JEPQ? Or JEPI? Or SCHD? or SCHG? Thank you Jeff 😄
This is a great question. You have top notch ETFs for each type of need in my opinion. I love JEPQ for high yield, SCHD for long-term dividend growth, and SCHG for long-term price growth. Generally speaking, but not always true, more SCHG is good for a young buck with many decades to invest. SCHD is better for the mid range for growing the dividends to beat inflation, and JEPQ is better for 'give me cash now to pay the bills'. I personally will have a mix of all of them in retirement (and even before retirement). JEPQ will be the horse for a while to get the yield flowing. I'll reinvest a chunk of JEPQ each month back into SCHD & JEPQ. I like to have JEPQ to create massive income short term, and SCHD to pace inflation over the long haul. It really depends on the personal needs. Not sure there is a 'best'.
Thank you for the kind words and for your extra level of support! I really do appreciate the members (and others of course as well) for sticking with me during this journey. I hope the value is piling up and that your investing journey is going well!
Thanks Tom! I appreciate the kind words. I've sadly stopped watching a lot of UA-cam channels because I've noticed a *ridiculous* shift to *extreme* (and misleading) titles and thumbnails to get massive views. I get people are hustling and trying to grow, and it's always been there, but wow has it gotten out of control. Never the way I want to do it. One goal and one goal only, help the masses take control of their financial future and never look back. No secret quick fixes and poorly aging market predictions here (:
@ Personally, I do have 4-5 UA-camrs that I watch and value their content. Then, there a few that are transparent and show their portfolios, which can possibly guide others on a strategy depending on their age, risk tolerance, and how much one can contribute monthly etc. Unfortunately, there’s so much “Click Bait” or repeat content, but I describe those as “ Kleenex”, use them once and you’re done with them! Keep making quality content and eventually wise investors will discover your channel and follow you consistently as I have.
I love that dividend combination. These are my two personal favorite dividend growth ETFs. I like that DGRO sprinkles in some more tech (about double compared to SCHD) while still having a nice value of holdings overall.
Jeff, Happy New Year to you and your family! Another great video! Yes, SCHD had a relatively low total return in 2024. But the overall total return of a portfolio is what matters. A portfolio should have a mix of multiple good ETFs (yes, the three fund portfolio did underperform for the year but long term it's been better). The other important consideration - like Jeff often reminds us - ETF overlap. SCHD practically has zero overlap with VOO and QQQ.
You absolutely nailed it. Shoot, I think you are ready to make these videos! Get me off the stage (: Seriously though, you touched on all of the reason I like SCHD, and portfolio balance in general. The low overlap with SCHD with the popular growth ETFs is impressive and effective. Right now it's been rough, but that doesn't change my direction moving forward.
Hey Sean. You and me both! It's been a rough run for 'non-tech, value' in the past few years. But that is exactly the point of combining SCHD with the quality growth ETFs.
Hey Jay. I think that is a great move. They are both solid dividend ETFs to be sure, but I have seen enough (personally) play out to strongly prefer SCHD at this point.
Thanx Jeff. Always interesting to see the way these four (and others) end up. Still on the SCHD / JEPQ train for income (but not yet collecting it as I have SS and pension to sustain us. Working hard for goal of six figures of dividends annually. Thanks for all your reviews of various holdings. I am always entertained by your channel as well as learning all of the time. Always enjoy your thoughts (and jokes too). Thanks again. Be well. Enjoy the TrailBlazers.
Hey Lance. Thanks for your amazing support of the channel in 2024. It was a great first full year on UA-cam. I went from being a random dude making videos (which I guess I still am) to feeling like I got to know some of the community at a deeper level. I wish you nothing but the best in 2025 and beyond. I love the JEPQ + SCHD combo for you. Gives you nice cash flow to reinvest as the SSI and pension cover the life / bills. I think that will be a powerful combination. Ironically, it will be even better in a market crash for you. You'll still have the SSI and pension, and you'll be picking up more shares per dollar reinvested. Of course your ceiling would be higher with growth ETFs and VOO, but I like the balance you have with mixing in some dividends for cash-flow to reinvest in all markets.
Jeff - thanks for looking at the folks at or in retirement vs. youngsters with 40 years to go. Starting dividend yield for the retirees with a 20 year lifespan requires a different thought process as you outline. I'm so tired of all the UA-camrs who settle for low interest starting dividends (less than inflation) and are excited by how the dividend growth will win the day - long term maybe (I believe dividend growth moderates over time frames much less than many of the 40 year projections). My portfolio strives for 5-7% return with growth of at least 4%. Definitely fits my 20 year planning horizon better than an SCHD offers. Appreciate your taking different viewpoints to fit the diversity of viewers!
Hey John. Thanks for the feedback, that is awesome information for me to have. I have to admit that I've been a bit guilty in the past of being 100% dividend growth focused in my messaging. It doesn't fit reality for many investors, and I wanted to be sure to touch on the power of both sides of the dividend fence. I love your targets of 5-7% yield with 4% growth. Pace inflation while still getting a nice chunk of money to enjoy life! Thanks for watching and for the comment.
Thanks for watching and for the comment. That is a great debate to have (: You can't really go wrong. I think DGRO is a quality dividend growth ETF while SCHG is a top-notch growth fund for a different niche. If you meant SCHD, it is my favorite dividend growth ETF. Any (or a powerful combination) of these 3 will do great for buy, hold, and accumulating investors.
Happy New Year, Jeff! SCHD’s recent drag is due to it’s relatively heavier allocation in health and energy sectors both which have not performed well compared to the relatively heavier technology sector in both VIG and DGRO. If and when that shifts (2022 hello), it will be a different bowl game. I am long SCHD because of its well crafted criteria. I do have some exposure to the other two, but nothing compared to the SCHD.
Hey Anand! Thanks for the incredibly accurate comment! I had a big smile reading it because you are spot on! I keep the videos higher level in general to relate to as many people as possible, but you absolutely nailed the sector specific data of the recent market. The reversion to the mean will eventually happen, and a new flock of haters will be born (: I can hear it now: *WHY DO YOU HAVE GROWTH ETFS!!! I LOVE SCHD!*
Can't go wrong with SCHD. That is actually my "growth" part of my portfolio. Covered Call etfs like JEPQ, SVOL, and GPIX make up one part. CLOs and bonds like JBBB & CLOI make up another part. I love BDCs, they make up another part. Look at MAIN & CSWC over the last 10 years (hint, they beat the S&P on total returns.) You combine the higher yield from things like the BDCs and JEPQ with the "safer growth" from SCHD and combine for decent growth & higher yield. You are able to get an APY 6.5-8% (based on how heavy you go with SCHD) and still see your original investment go up.
Hey Jonathan. Love the strategy for your needs. That is where everyone is a bit jaded in the past couple years. If you hold something like SCHD, people say you are CRAZY for not going all in on growth, especially if you're young... But they are basing this off of the past couple years. SCHD, which isn't a crazy grower but is a solid fund, outperformed VOO in TOTAL RETURNS in its first 11 years. By a comfortable margin. Exactly zero of these newer investors were making these (growth only) comments a mere two years ago (: We'll do plenty of reverting to the mean in the coming years. I will stick with a growth / value / cornerstone (VOO) mix in all markets. Buy the dip by simply buying to my target allocations.
1902 shares of SCHD, here. It's our #2 position behind broad US, but *should* be #3. I went a little heavy in 2023 and haven't balanced it back out yet.
Love it Xal. Thank you for taking the time to watch the video and for dropping a comment. I know how you like to pick up value at the right time from lurking in the legend, Ryne Williams, chat (: I think SCHD will become more favorable in the coming years (of course I have no idea WHEN this will happen, specifically). Stay the course and keep growing!
@JeffTeeples Oh, wow. I'm famous. Or perhaps infamous. 😆 Yea, I do love me some value, especially smallcap. AVUV is the #3 I'm looking to overtake SCHD with, actually.
I actually have an update on that. It's 2013 shares of SCHD. My wife's IRA got maxed for '24 as of today, after 6 months of negligence. No worries, though. I got her automatic contributions back online, and we'll both max our IRAs in the current year. ❤️
Oh man Xal, music to my ears! Maxing those Roth IRAs! Love it. I did mine last week, and will get the wife's finished by the end of the month! I like to drop them in early and forget about it. Makes me a bit cash poor, but I can replenish that over the year and let the Roth work its magic.
Happy New Year Jeff. Your recent video on your first Roth conversion inspired me to finally open a Roth and my plan is fund that first (other than my 457acct) with back door contributions. Once my 8000$ is in I’ll move over to my brokerage for remainder of the year.
Hey Kevin. That is awesome! Roth IRAs are nice because we can take the money out tax and penalty free well before the age of 59.5, unlike traditional IRAs. Also, the government will never *make* us take the money out with RMDs. I plan to eventually convert all traditional IRA to Roth IRAs (for my stuff, and my wife's 401k eventually).
This is a great question. I am towards the end of the video when I use the Seeking Alpha charts to show total return. The dividend growth on my earlier spreadsheet and in Seeking Alpha is strictly comparing 2024 dividends to 2024 dividends. In the case of SCHD, it was just over 12% 'dividend growth' in that case. Short answer: No during most of the video, but yes, fully reinvested is assumed at the end on the total return charts.
LOL. I said that and then thought 'hmm, wonder if I should redo that part'. I usually just shoot from the hip. Thanks for watching and for the comment (:
Hey Patri. Thank you for watching and for the question. This is impossible for me to say without the details. But, generally speaking, staying the course with a balanced portfolio will be the way to make it to retirement. Probably lean more to value or dividends as you get closer (assuming you are heavier in growth during the accumulation phase). My favorite retirement ETFs are as follows: SCHD for dividend growth, JEPQ for high yield if you need more 'cash now' until social security and other things kick in, and VOO for a solid cornerstone. If you still want growth, SCHG or QQQM are great (I use VGT in the accumulation phase, but most aren't interested in 100% technology in retirement).
Nice. Love SCHD. Especially since it’s on sale now. 😂 When you get a chance , can you tell me your thoughts on SPMO as compared to VOO. I have been doing some back testing and it seems good. Not sure if I should do some in VOO and some In SPMO
Hey Mohit. You're speaking my language. Every year that SCHD underperforms is another year I'm licking my chops and buying more. I've been watching SPMO for a while now. It is really impressive and it has severely outperformed VOO on any stretch of time that I examine. I know momentum is a 'winning factor' in general, but I am a bit hesitant to dive in until I see a major market downturn (beyond what 2022 gave us). I'm not saying SPMO will fail, but I just want to see things play out a little more before diving in myself. I will say, in 2022, SPMO did outperform VOO by a lot. But it did underperform VOO by a quite a bit in 2016, 2019, 2021, and 2023. It seems to get, well, momentum a bit sporadically. It crushed VOO in 2024, which gives it outperformance in all time stretches overall. I just want to see a little more history. But it looks great.
@ That’s what I observed as well while doing back testing regarding SPMO. However rolling return on average is up by 3% for past almost 10 years. May be I will do some in SPMO to see how it works out and will keep some in VOO. It might overlap but if SPMO strategy really works out then may be it’s worth it. Please do make analysis SPMO and XMMO in your video if you ever get chance. Thanks for your great work always
Hello! Would you recommend someone that is not US based to invest in SCHD? For example I'm a Singaporean looking to invest in SCHD for my dividend Portfolio and understand there is up to 30% tax for my dividends. Should i still buy regardless?
Thank you for watching and for the question. I haven't ran the numbers enough to have a strong opinion on this one. My gut says I would go with a low-cost index fund to build stable wealth over many years in that situation.
Hey Josh. You had me confused too, lol. I see Adam mentioned the March* reconstitution below. Once per year SCHD will do a massive overhaul by dropping some holdings and adding in new ones.
One question I always had about prioritizing dividend growth over higher yield: Let’s say you have a 2% yielding stock with a fixed 10% Div growth, and wanted to compare that to a 10% yielding stock with 0% growth. Wouldn’t it take about 17 years ( 1.1^17 = 5, and 5 x 2% yield = 10% yield) to match the 10% yielder? And in those 17 years, you’re getting the upside of having the 10% divs while the 2% Div growth stock is playing catch up. So if you started with $100k invested in each, it’d be obvious that it would take quite a while to surpass total divs using the 2% grower vs the 10% high yielder. Am I missing something?
Your spreadsheet shows amount received each year, but doesn’t show cumulative amount received since initial investment. That’s an important metric when comparing the ETFs/scenarios.
Btw, I like your Power metric concept. Could you create like 4-5 scenarios where you set up each of them with the same Power value and different permutations of Yield and Growth? This would be a more scientific comparison as your ETF scenarios have different Power values so multiple variables that clouds the assessment.
Hey Simon You're spot on here. It takes a looooong time to to grow to the point of the high yield for a low yielding dividend grower. There are a couple primary reasons to go with dividend growth over yield, even knowing the gap takes time to cover: 1) Compound math is WILD once it does catch up. You will crush inflation with dividend growth and eventually run out of money (potentially) with high yield that doesn't outgrow inflation. Compound is goofy and feels fake when you see the high grower in the millions 40 years later and the high yield always uses 'simple math'. I think ultimately a balance is the way to go (some JEPQ, some SCHD) and then lean to growth as you comfortable cover bills. 2) High yield gives a surplus early on compared to high dividend growth. But something to keep in mind is that *usually* the total returns are better for something with a 3% yield compared to a 10% yield (assuming similar underlying indexes and value tilts). My model in this video didn't account for the (typical) total return advantage of the growers. So it 'looks' bad by comparison because we don't see the price double every 7 to 8 years like it does in reality. I'm making the high yield show 'most' of its total return, while the dividend grower isn't getting credit for the price appreciation in this simple model.
I didn't show this because it would be deceptive. Yes, the yield looks WAY better for the high yielding dividend payer. This is because most of the total returns are within that yield. The grower will *usually* make up for it and then some over time with total returns (adding price appreciation). This simple model assumed no reinvestment and didn't track price. So it favors high yield on the 'eye test' already, and I didn't want to make it even less *realistic*.
I will tinker with the dividend power formula. I thought of it spur of the moment because I always neglect yield in these videos. Yield definitely matters, so I wanted to add it in somehow.
Hi Jeff! JEPQ crushed SCHD on dividend yield (9.6% vs 3.6%) in 2024. I'm tempted to move a big chunk of SCHD to JEPQ to get the fat dividend. I am 61 years old and retired. What is the risk?
Hey Jim. I love JEPQ. It is my favorite high yield ETF. JEPQ has crushed SCHD on total return in the past couple years with it being a growth heavy market. I hold and love both SCHD and JEPQ (will be my primary holdings when my wife and I fully retire). The yield of JEPQ will always crush SCHD in a given year. This is because it produces the income (over 90% of it) by selling call options against the Nasdaq-100 holdings. Therefore the dividend will not grow as much as SCHD as far as yield on cost. JEPQ is for needing more cash-flow *now* and SCHD is for building cash-flow in the future and for crushing inflation. I like a mix of both. SCHD, with the low 3.6% yield, has doubled its 'per share' dividend payments every 6.5 years since inception. So the 'yield on cost' doubles every 6.5 years for each share held. The 'yield' will stay in the 3%s because the price appreciates as well. It is a dividend grower rather than a high yielder. JEPQ also pays mostly 'ordinary' dividends instead of qualified. This will increase the taxes on the dividends unless it is in a tax protected account. I like both, and I think they complement each other well (SCHD is value, JEPQ is growth holdings).
@@JeffTeeples I think I get it Jeff. You are saying that a share of SCHD will pay increasing dividends each year, while a share of JEPQ pays the same dividend year after year. So SCHD dividend's pay more then JEPQ over time. That is a complicated concept. Thank you so much for the lesson. Yep, that's a bummer about the tax disadvantage of JEPQ dividends treated as regular income. Hopefully we keep that 12% bracket 4 more years!
I'll be honest here; I don't have a ton to say about college or accounting. Truth be told, I quickly gravitated to finance in 'the real world' when I got obsessed with economics, statistics, systems, and Excel (: I didn't spend a ton of time in 'accounting' per se.
Hey Cyrus. Thanks for the comment (and question). I answer everything I see. Beware that if you reply to an old post sometimes I will never see it (UA-cam's filters are awful).
@@JeffTeeples great. This was my question from earlier: Hi Jeff, I like your content as it's very high quality, but I'm confused about something ... I don't know which video I watched, but you compared SCHD to JEPQ and how SCHD overtook JEPQ in dividends due to dividend growth after a few years ... Correct me if I'm wrong, but ... I don't think you took the growth component of JEPQ into consideration. That is, If the yield stays constant without any growth, the stock has grown hence 9.5% of a higher value in the stock will result in a higher payout. When we use portfolio visualizer and re-investment payouts or not, JEPQ has outperformed SCHD with an increase in yield each year due to the ETF value going up. higher. 8% of a higher value is a higher distribution, right? That is why it's best to look at total returns to compare apples-to-apples at the end, right? I even plugged in EOS (a closed-end fund that uses covered calls on tech stocks that have been around a lot longer) due to a much longer history, as it has similar performance to JEPQ You can see the higher distributions each year due to the growth of the asset itself. what are your thoughts on this? If I'm missing something regarding your comparison and analysis, please let me know.
You are spot on. JEPQ has been incredible in the short time it has been around (especially on portfolio visualizer, which starts in 2023) compared to SCHD because it is based on growth holdings (Nasdaq-100). That index, QQQM, has CRUSHED SCHD in the past couple years. SCHD (value) has had a rough go during that duration. I think I showed when the dividends of SCHD would pass the dividends of JEPQ (no reinvestments, same amount of shares). But the total return is what matters because we can reinvest the dividends to get more cash-flow (not via per share growth, but by having more shares). Be careful to note that 'generally speaking', that hurts high yielders compared to lower yielders. Because total return is what ultimately matters, and 'usually' high yielders have lower total returns compared to a similar comp not creating cash-flow by design (lowering growth ceiling in favor of cash-flow). For example, QQQM beats JEPQ. VOO beats JEPI. Etc. But you are 100% right, with reinvestments, JEPQ has been MUCH better than SCHD in the short 2 booming growth years. Remember, SCHD outperformed VOO (total returns) on the 11 years before that (: I love JEPQ, and own it in my Roth, but it is very young. I think QQQM will outperform it (total returns) over many decades, but I like the downside protection of JEPQ as I get closer to retirement.
@@JeffTeeples Thanks for the quick reply. Yes, I agree with your points. But I was making a different point. I'm not saying one is "better" than the other. That's a different topic. What I was saying is that irrespective of whether you re-invest the dividends or not, say you don't, the distribution (dividends) from JEPI or JEPQ or EOS, etc. will increase each year if their % payout remains relatively constant and doesn't drop *and* the underlying asset increases in value. For example, If I get 9% on a $57 ETF (JEPQ) that yields about $5.13 per share this year. If JEPQ is up 10% next year and it still pays 9%, then I'll be getting $5.6 per share next year. I'm simplifying it, but you see what I mean. The point is that as long as the ETF price increases and payout (dividend) doesn't decrease, the $ amount I receive increases each year as well. So we can't say SCHD will catch up and surpass in yield because it grows its dividend and JEPQ (or others like it) will give out static payouts forever each year. Right? Bottom line: as you said, it comes down to the total return. It doesn't matter whether we take out the distributions and spend them, re-invest, or the asset doesn't pay any dividend and you have to sell shares for 'income'. I understand each of these has its own implications, but when comparing apples to apples, we can't say SCHD will beat inflation because it grows its dividend, and JEPQ (or others like it) will not because its dividends do not grow. At the end it comes down to which one gives you the highest total returns, right?
I think you have a great understanding of it overall. I would argue that we (reasonably) can say that SCHD will outpace inflation indefinitely. Not meaning 'guaranteed each and every year', but looking at the big picture with the 11.5% dividend CAGR since inception, and a methodology that supports that model moving forward. And we can 'reasonably' say that the per-share dividend of SCHD will pass JEPQ over time, pretty easily. It is the specific amount of years that is debatable. Again, without dividends being reinvested. SCHD has doubled its dividend per share every 6.5 years since inception. It's yield on cost is already ahead of JEPQs current yield (to be clear, assuming we bought the shares over a decade ago). The yield on cost of JEPQ 'may' go up, but over 90% of its dividends are based on the volatility of the market, while under 10% are based on companies growing the dividends (the underlying holdings of the Nasdaq-100). Total return is king, because in reality we can reinvest the dividends in JEPQ (using the high yield) to create more 'dividend growth' (total cash-flow based on more shares). The TTM dividend CAGR for JEPQ has been negative for a while now, although, I see it literally just turned positive this month. But I do think it will vary quite a bit based on the juiciness of the options market. Bottom line, I love and will have both in 'roughly' equal proportions when I retire (: I'll take ~6.5% yield and ~6% dividend CAGR (weighted 50/50).
@@JeffTeeples Yes. An ETF. www.google.com/search?q=cdgv&oq=cdgv&gs_lcrp=EgZjaHJvbWUqFggBEEUYJxg7GEYY-gEYnQIYgAQYigUyBggAEEUYOzIWCAEQRRgnGDsYRhj6ARidAhiABBiKBTIHCAIQABiABDIHCAMQABiABDIHCAQQABiABDIHCAUQABiABDIHCAYQABiABDIHCAcQABiABDIHCAgQABiABDIHCAkQABiABNIBCDYwOTBqMGo3qAIIsAIB&sourceid=chrome&ie=UTF-8
Ooooo, I know CGDV. You had GGDV above, I don't know CGDV for it to click. That is one I'm watching, but a bit more growth oriented and lower yielding by comparison for this video. Although who knows what the future will bring! It looks solid so far.
One problem with your analysis is that many dividend investors are those using the dividends for paying bills in retirement. They aren't reinvested, but rather, used to pay the bills, etc. Growth over 10 years is not really an issue. THAT is why I invest in both SCHD and VYM, to get the best of both worlds over a relatively short term (LESS than 5 years.) We want to use the money, not just keep it in the brokerage account forever.
I agree that there is a lot more to reality than this simple model. Thanks for watching and for leaving a comment. One question, and I don't mean this as an attack at all, but why does needing yield now to pay the bills make VYM a better option than SCHD? SCHD has a higher yield by a decent amount, and a higher growth rate. You lost me a little there. Again, if you added something high yield (that doesn't grow the dividends as much), I would completely follow the logic. I'm not saying you're wrong, just questioning the role of VYM with your specific goals. Thanks!
If you have less than 15 years to retire, SCHD is not your investment vehicle to produce enough income to retire on If you have 20+ years , SCHD will leave the others behind and it will outpace inflation
It's all about fine-tuning the mix. I think 15+ or 20+ years *before* retirement will call for more growth ETFs and/or VOO + VTI in the accumulation phase. SCHD is solid as well. I have had it in my mix that has crushed the performance of VOO, VTI, and VT (not just in theory, in reality). But, 100% SCHD probably isn't the way to go in the accumulation phase. But in actual retirement, that is where we will want 'as much dividend growth' as possible while having enough high yield to pay the bills real-time. Adjustments can be made each year to 'tilt' to yield or dividend growth based on each individual situation.
@@JeffTeeples ideally, SCHD is not the only fund. 40% SCHD, 60% VOO or similar. or 40% SCHD 30/30% VOO QQQM If someone has less than 15 years to retire, maximize growth and then switch to safer more stable income investments. SCHD snowball effect starts to really accumulate after year 20. Anyone who has a 30 year time horizon should plunk down as much as they can into their Roth for the first three years int SCHD. Then years 4-30 do 40-60 or 40-30-30 split between SCHD and VOO or SCHD and VOO/QQM. Eventually VOO and QQQM will surpass SCHD in value in the portfolio and then its time to think about rebalacning
Thanks for watching and for the comment. I love the combination too. I don't mind the strong tech tilt on the growth side of things. I'm a future tech bull myself.
SCHD important fact is that the increase in dividend is not because of the underlying holdings dividend growth in 2024. They did replace lower yeilding stocks like Broadcom and Merk which has amazing dividend growth and growth and switching them for high yeilding stocks with slower dividend growth. Someday that dividend growth will stop really quick. No wonder the etf underperform many dividend etf on total returns for years now.But for retirement income it’s a great etf. If you take all holdings in isolation and check their dividend growth in 2024 you will see i’m right. More like a high dividend etf. SCHD dividend growth in 2023 of only +3.77% prove my point.
I think you make some excellent points. To sum it up, you’re saying SCHD’s dividend growth isn’t sustainable because it relies heavily on the annual swapping of low yielders for high yielders during reconstitution. You’re right-this does play a significant role in SCHD’s impressive 11-12% annual dividend growth rate over its 13-year history. However, it’s also important to note that SCHD captures organic dividend growth from its holdings as well. This blend of organic growth and strategic yield swapping creates, in my opinion, an ideal combination-the best of both worlds! SCHD has maintained an outstanding track record. You mentioned 2023’s 3.77% growth rate as proof of your point, but this is the only year since inception where SCHD had less than 6.9% dividend growth. Is using one outlier really proving a point? In 2024, for example, SCHD achieved over 12% dividend growth, significantly outperforming ETFs like VIG and DGRO, which delivered growth in the 5% range, and VYM, which had growth under 1%. SCHD’s ability to consistently grow dividends-even in challenging market environments-demonstrates the strength and resilience of its methodology.
I think you make a lot of great points here! It is why, unless in retirement and truly looking for increased dividends only, I don't think SCHD is a great '100% of the portfolio' holding. In the retirement scenario it is great. But I'm not sure you have a deep understanding of how the methodology works. Well, I'm torn, because it seems like you do, but then you neglected your own conclusion. Every year, in March, it will drop companies that don't meet the criteria for the screening and scoring process. To your point, it drops companies like AVGO. Hindsight is 20/20, and that ended up being a rough drop. But realize it was dropped because it didn't meet the top 50% of yield for the companies that made the initial screens. It crushed all other requirements. I'm trying to think of an easy way to explain the math. It's dividend CAGR is 11.5% since inception over a decade ago. The process 'consistently grows' the dividends while keeping the holdings at a value tilt (run ups naturally work themselves out via the cutoffs). It's not a red flag when the changes are made *because* the formula focuses on consistently paying and growing dividends while keeping a clean balance sheet. There will always be plenty of companies going up and down, and there will always be 100 holdings that score well compared to the others on the specific screens and scoring. Just like there will always be 500 of the largest companies in market (S&P 500 changes often). I don't think you are *wrong* about what you said. I do think it is important, especially for younger people, to surround it with growth ETFs. Or, just roll 100% VOO or VTI for a 'similar value mix'. But remember, SCHD outperformed VOO in its first 11 years in total returns. This is a fact. And, using the underlying index, it dominated if you stretch it back to 1999, however, this is a bit 20/20 because dot.com, but still. The underperformance is *VERY* new in the last 2 years. Where were you during 20+ years compared to 2 (: What will happen in the future? Great question. Answer: No clue. I'll hold multiple quality ETFs.
If ScHD abandons its methodology (eg not reconstituting every year) you may have a point, but the ETF drops stocks that aren’t in the top 200 highest yielding stocks in the index and replaces them with those that are in the top 100. I suspect this alone will help it maintain a high dividend growth rate.
Hey Sia. Nice mix you have there. MSFT and V are in my stock portfolio as well. You sprinkle in a nice mix of dividend growth and dividend yield between those 4 individual stocks. I love JEPQ in my Roth IRA as well. I'm excited to see how it plays out over the coming years.
Hey Jeff, what are your thoughts on JEPQ actually being growth, especially more than 2%. Considering they do get some of the upside, albeit being limited because of the CC’s
I prefer jepq and fdvv over schd but that’s me. FDVV beats SCHD in the 1, 3 and 5 year returns so I’m surprised it’s not used as comparison in this. I used to be heavy into SCHD like many but now I prefer FDVV and it is doing a lot better
I consider JEPQ to be a growth ETF. At least this is how I implement it into my target allocations. I should reiterate, I think QQQM is better if we are dollar cost averaging in for over 10 years. But for us (wife and I), we looking to retire soon, and we want the raised floor from the call options. I'll give up ceiling. So I guess it is a 'mild growth' ETF (: I wouldn't be mad if people considered it for any category. Heck, could even go cornerstone, the thing has been lockstep with VOO since inception. It has one of the more popular underlying growth indexes of the past 40 years. I look at the holdings and the PE ratio (very high) and say 'growth with a cash bonus'.
For sure. Thank you for taking the time to watch the video and for the comment. I think a balance is important for any risk tolerance and goals. Very generally speaking, more growth for younger folks and more value and or dividends for retired folks. Then hybrid portfolios between based on the situation and needs.
Thanks for watching (if you did) and for the comment. I don't think you're completely off base here, in general, during the accumulation phase. But goals and risk tolerances will vary depending on where someone is at in the timeline.
Let's hope not, lol. But never know with a vague blanket statement like that about dividends. I hope they are more on VOO or VTI (which have underperformed my mix, which has better dividends, but that is another story for another video).
WOW. Thanks Lance. Welcome to 2025 to me! Seriously, your support is unreal. You are a pillar in this community with or without extra $, but thank you thank you!
I have over $46,000 in SCHD at 32 I think thats a good starting point, great video!
Congrats. It's my largest single holding at 52. Been a big drag on the portfolio last few but I still remember 2022 ftw
Hope you have market and growth stuff as well.
Hey Josh! That is incredible. I'll add, and this depends on your goals and situation, you'll likely want a nice balance of growth ETFs as well for your journey. Lately, SCHD has been a drag on the returns, and thus buying more has been a smart (long-term) move. If you have growth ETFs like QQQM, SCHG, VUG, VGT, etc they will have carried the load lately.
But eventually the script will flip and SCHD will be the hero. It's nice to always have a balance over many years or even decades and to stay the course.
Amen! I think people quickly forget about what happened just a short time ago. It takes going through a crash, and it will get worse than 2022, to realize that drops hurt compound at a disproportional level.
For example, a 50% drop turns $1,000,000 into $500,000. Then a 50% gain gets it back to $750,000. We need 100% to get back to where we started. Also, never panic sell during said drop (:
I also agree with your other comment for Josh. Balance is key!
@@JeffTeeples Thanks for that i also have QQQM and VTI for market and probably will add small value to make a pretty solid portfolio IMO.
SCHD is my largest holding and i add to it monthly. I love SCHD.
Very nice! It's not always the sexiest ETF out there, but it flat out gets the job done when we zoom out. I think you'll be a happy camper by adding to SCHD over many years/decades.
Congrats on 100 videos Jeff! And many thanks always for these dividend videos - it is how YT helped me find you.
Hey Kent. I appreciate your consistent support and for being a part of this great community. I'm glad you found the channel, and I look forward to learning more together in the future.
Thanks!
Hey Brianna! I go to get my coffee, refresh to look for new member comments, and boom, there you are! Thank you so much for your AMAZING support of the channel. It was an awesome year and I wish you nothing but the best in 2025!
Well-said. SCHD does what it is supposed to do. It can be highly effective in a balanced portfolio.
You nailed it Alex. All about a balanced approach. It beat VOO in its first 11 years on total returns, which isn't the point of it and all the more impressive, but then it fell short the past couple years. Now the haters are out in full force. We will revert to the mean and then all of the *I told you so* growth haters will be telling me why VGT is so horrible (:
I will always balance value and growth to compound the wealth over time.
@@JeffTeeples Exactly!
I think you sealed the deal with the statement "schd has very little overlap with the rest of portfolio". We as investers tend to focus on "the now" and not "the goal". In a three fund portfolio, each part plays a role; growth, core value and income stability. For me, I choose to stay the course with SCHD. It does its job in my IRA that i can't add to. When dividends pay out, i can rebalance my IRA without selling anything, mostly. This is helpful, productive and a great option to bonds which don't appear to hold their value these days.
Thanks again for the vid. Keep churning out the material and I'll keep the Kapow Chop on the like button.
Haha, thanks Roy! I appreciate your support of the channel throughout its first full year. It makes this stuff a lot more fun to produce. Being a channel member goes above and beyond, but the consistent (great) comments are much appreciated.
SCHD gets a lot of haters because of the 'bad' total returns in the past few years. But within the portfolio, to your point, we have our growth carrying the load lately. We will have a new flock of growth hater / 'I told you so' guys when VGT falls face first. These will be different people and the other haters will slowly fade to the background. But at that point, we will have SCHD stabilizing the portfolio. I think these people should buy VOO and focus on other areas of life.
The bottom line is that we will always have coverage with a solid mix of stocks and/or ETFs. Hating is easier, and they will always trickle in, but I can almost guarantee that most of the haters do *not* have a balanced portfolio, or a deep understanding, of this stuff. I've noticed, over the years, and this isn't exclusive to investing, people that are learning, growing, and working on life balance don't have time, or desire, to drop negative comments. Now I'm all for constructive criticism all the time. But it's easy to sniff out the difference (:
Jeff, do you own all 4 of the dividend ETF’s you mention in this video? Would you say there’s merit to owning more than one due to overlap etc?
Hey Ken. Great question! I only own SCHD out of these ETFs. This is because I'm very tech heavy in VGT and hold VOO as well. The lack of tech is what I *need* with my dividend / value side.
In a world where I could only hold dividend growth ETFs from this video, I would *not* go 100% SCHD. I would do a mix of VIG + DGRO + SCHD. VYM would not make the cut, but it is a good benchmark ETF to throw in.
@@JeffTeeples very interesting. I am thinking of holding off on tech/growth for now and getting some dividend stuff like SCHD. I have a SEP IRA w/money on sidelines in money market waiting to be invested but am wondering if I should do it in an old Roth account or start anew Roth account. JEPQ non qualified dividends are still tax deferred in a SEP IRA right? The only difference is that in retirement you’ll have to pay regular tax rates on all income if not held in a Roth? The long term cap gain rate would only apply in a taxable account? I’d rather just add SCHD and JEPQ to my SEP IRA but am going in circles about if I should house them there.
It has little.overlap.because there's only like 100 holdings. Half of it is in the S&P. One thing a lot of people don't realize...when you.hold SCHD along with a growth ETF like SCHG, QQQ, VGT, whatever....you basically end up with an allocation that will equal VOO for your large caps
Thank you so much for explaining High Yield & Growth.
Thank you for watching and for the kind words. I appreciate it!
@ I’ve heard others speak of this I did not understand why I needed or not needed to pay attention to this, but seeing your chart with your simple explanation made it easier to make decisions about my Roth. I’m in my 50’s I began a Roth a few years ago, I selected stocks and etfs and it was slow going…(of course I was thinking well you don’t know what to select or not select), but I’m feeling frustrated and concerned I won’t have enough for retirement. It’s difficult to be able to add $100k with the small income I make, in fact I have hard time achieving $8k limit for Roth. With that said when I change jobs I was thinking of rolling over my 401k $7k to my Roth & would like add to my portfolio and was thinking of adding JEPQ. I’ve thought about SCHD, SCHG, but I don’t have 30 years & I’m not starting at $100k & watch it grow. JEPQ has higher dividends, but has qualified and ordinary dividends, which could mean higher taxes, but if it’s in a Roth that would mean tax free, I believe it’s good to add now because I’m older, I think…I usually reinvest my securities, but I don’t think I can with JEPQ so maybe I can buy more shares of JEPQ or add another etf. I’m trying to figure out what’s best for me so I’ve been watching videos & yours, along with others are helpful. Have any thoughts with me adding JEPQ? Or JEPI? Or SCHD? or SCHG? Thank you Jeff 😄
This is a great question. You have top notch ETFs for each type of need in my opinion. I love JEPQ for high yield, SCHD for long-term dividend growth, and SCHG for long-term price growth.
Generally speaking, but not always true, more SCHG is good for a young buck with many decades to invest. SCHD is better for the mid range for growing the dividends to beat inflation, and JEPQ is better for 'give me cash now to pay the bills'. I personally will have a mix of all of them in retirement (and even before retirement). JEPQ will be the horse for a while to get the yield flowing. I'll reinvest a chunk of JEPQ each month back into SCHD & JEPQ. I like to have JEPQ to create massive income short term, and SCHD to pace inflation over the long haul.
It really depends on the personal needs. Not sure there is a 'best'.
@ Thank you Jeff that was very helpful. 😁🤩
Thanks again. Happy New Year!🎈
You're welcome. Thank you for taking the time to watch the videos. Happy New Year! Best wishes in 2025 & beyond!
Thanks Jeff! Appreciate each and every video you create for us.
Thank you for the kind words and for your extra level of support! I really do appreciate the members (and others of course as well) for sticking with me during this journey. I hope the value is piling up and that your investing journey is going well!
Happy New Year Jeff!!
Another good video!
I always look forward to your content, as I can keep absorbing valuable information!
Thanks!!
Thanks Tom! I appreciate the kind words. I've sadly stopped watching a lot of UA-cam channels because I've noticed a *ridiculous* shift to *extreme* (and misleading) titles and thumbnails to get massive views. I get people are hustling and trying to grow, and it's always been there, but wow has it gotten out of control. Never the way I want to do it. One goal and one goal only, help the masses take control of their financial future and never look back. No secret quick fixes and poorly aging market predictions here (:
@ Personally, I do have 4-5 UA-camrs that I watch and value their content.
Then, there a few that are transparent and show their portfolios, which can possibly guide others on a strategy depending on their age, risk tolerance, and how much one can contribute monthly etc.
Unfortunately, there’s so much “Click Bait” or repeat content, but I describe those as “ Kleenex”, use them once and you’re done with them!
Keep making quality content and eventually wise investors will discover your channel and follow you consistently as I have.
Great video!
I appreciate the kind words Shawn. Thanks for taking the time to watch the video.
Thank You! Always great content! I still split my dividend/value between SCHD VTV
Thanks for watching and for the comment. I think that is an awesome mix for that section of the portfolio!
Same
$36k in schd, now added dgro to my portfolio.
DGRO kicks butt. It compliments SCHD very well. I split them both 50/50.
I love that dividend combination. These are my two personal favorite dividend growth ETFs. I like that DGRO sprinkles in some more tech (about double compared to SCHD) while still having a nice value of holdings overall.
@@JeffTeeplesYes. SCHD & DGRO both are awesome in any portfolio.
Jeff, Happy New Year to you and your family! Another great video!
Yes, SCHD had a relatively low total return in 2024. But the overall total return of a portfolio is what matters. A portfolio should have a mix of multiple good ETFs (yes, the three fund portfolio did underperform for the year but long term it's been better).
The other important consideration - like Jeff often reminds us - ETF overlap. SCHD practically has zero overlap with VOO and QQQ.
... and 0% overlap by weight with SCHG.👍
Absolutely. I love that 0%. It is somehow much more satisfying than 1%. Whereas 1% to 2% feels like 'who cares' lol.
You absolutely nailed it. Shoot, I think you are ready to make these videos! Get me off the stage (:
Seriously though, you touched on all of the reason I like SCHD, and portfolio balance in general. The low overlap with SCHD with the popular growth ETFs is impressive and effective. Right now it's been rough, but that doesn't change my direction moving forward.
Love me SCHD😊
Hey Sean. You and me both! It's been a rough run for 'non-tech, value' in the past few years. But that is exactly the point of combining SCHD with the quality growth ETFs.
keep pumping out those financial informational videos Jeff!!!!
Thanks Kevin. Will do! Best wishes in 2025!
Due to the long term Div Growth I’m selling my VYM and grow my SCHD position even more! After I make the move I will have over 200 shares of SCHD!!!
Hey Jay. I think that is a great move. They are both solid dividend ETFs to be sure, but I have seen enough (personally) play out to strongly prefer SCHD at this point.
yeah - pick either VYM or SCHD but not both. then add VOO or some other broad market growth fund
@ I agree! I am going to have SCHD with FXAIX after the move
Thanx Jeff. Always interesting to see the way these four (and others) end up. Still on the SCHD / JEPQ train for income (but not yet collecting it as I have SS and pension to sustain us. Working hard for goal of six figures of dividends annually. Thanks for all your reviews of various holdings. I am always entertained by your channel as well as learning all of the time. Always enjoy your thoughts (and jokes too). Thanks again. Be well. Enjoy the TrailBlazers.
Hey Lance. Thanks for your amazing support of the channel in 2024. It was a great first full year on UA-cam. I went from being a random dude making videos (which I guess I still am) to feeling like I got to know some of the community at a deeper level. I wish you nothing but the best in 2025 and beyond.
I love the JEPQ + SCHD combo for you. Gives you nice cash flow to reinvest as the SSI and pension cover the life / bills. I think that will be a powerful combination. Ironically, it will be even better in a market crash for you. You'll still have the SSI and pension, and you'll be picking up more shares per dollar reinvested.
Of course your ceiling would be higher with growth ETFs and VOO, but I like the balance you have with mixing in some dividends for cash-flow to reinvest in all markets.
Jeff - thanks for looking at the folks at or in retirement vs. youngsters with 40 years to go. Starting dividend yield for the retirees with a 20 year lifespan requires a different thought process as you outline. I'm so tired of all the UA-camrs who settle for low interest starting dividends (less than inflation) and are excited by how the dividend growth will win the day - long term maybe (I believe dividend growth moderates over time frames much less than many of the 40 year projections). My portfolio strives for 5-7% return with growth of at least 4%. Definitely fits my 20 year planning horizon better than an SCHD offers. Appreciate your taking different viewpoints to fit the diversity of viewers!
Hey John. Thanks for the feedback, that is awesome information for me to have. I have to admit that I've been a bit guilty in the past of being 100% dividend growth focused in my messaging. It doesn't fit reality for many investors, and I wanted to be sure to touch on the power of both sides of the dividend fence. I love your targets of 5-7% yield with 4% growth. Pace inflation while still getting a nice chunk of money to enjoy life! Thanks for watching and for the comment.
Heavy in SCHD! Also have SCHB and G!
Hey Will. Dividend growth? CHECK. Growth ETF? CHECK. Awesome cornerstone? CHECK. Love the mix. Stay the course and keep growing that thing.
Schd + SCHG = VOO (basically)
Thanks Jeff
Thanks for watching Stephen. Have a great 2025!
Congrats on 100! "Dead years old" 🤣
ROFL, yeah, that one slipped out and I figured I would leave it in there. Thanks for watching (:
That had me laughing out loud, "dead years old" 😂😂😂
Im debating schg or dgro idk what to do
Thanks for watching and for the comment. That is a great debate to have (: You can't really go wrong.
I think DGRO is a quality dividend growth ETF while SCHG is a top-notch growth fund for a different niche. If you meant SCHD, it is my favorite dividend growth ETF. Any (or a powerful combination) of these 3 will do great for buy, hold, and accumulating investors.
Happy New Year, Jeff! SCHD’s recent drag is due to it’s relatively heavier allocation in health and energy sectors both which have not performed well compared to the relatively heavier technology sector in both VIG and DGRO. If and when that shifts (2022 hello), it will be a different bowl game. I am long SCHD because of its well crafted criteria. I do have some exposure to the other two, but nothing compared to the SCHD.
Hey Anand! Thanks for the incredibly accurate comment! I had a big smile reading it because you are spot on! I keep the videos higher level in general to relate to as many people as possible, but you absolutely nailed the sector specific data of the recent market. The reversion to the mean will eventually happen, and a new flock of haters will be born (:
I can hear it now:
*WHY DO YOU HAVE GROWTH ETFS!!! I LOVE SCHD!*
SCHD FOR LIFE!!!
Amen! I don't know if that is the ultra rich life, *but*, I can tell you that the cash-flow will keep raining and growing (:
@@JeffTeeples Wish I would have started in my 20s!!! I’m 55. I’d be retired by now 🤦🏻♀️. I have 8440 shares. My goal is 20,000 by the time I’m 60.
Can't go wrong with SCHD. That is actually my "growth" part of my portfolio. Covered Call etfs like JEPQ, SVOL, and GPIX make up one part. CLOs and bonds like JBBB & CLOI make up another part. I love BDCs, they make up another part. Look at MAIN & CSWC over the last 10 years (hint, they beat the S&P on total returns.) You combine the higher yield from things like the BDCs and JEPQ with the "safer growth" from SCHD and combine for decent growth & higher yield. You are able to get an APY 6.5-8% (based on how heavy you go with SCHD) and still see your original investment go up.
Hey Jonathan. Love the strategy for your needs. That is where everyone is a bit jaded in the past couple years. If you hold something like SCHD, people say you are CRAZY for not going all in on growth, especially if you're young... But they are basing this off of the past couple years.
SCHD, which isn't a crazy grower but is a solid fund, outperformed VOO in TOTAL RETURNS in its first 11 years. By a comfortable margin. Exactly zero of these newer investors were making these (growth only) comments a mere two years ago (:
We'll do plenty of reverting to the mean in the coming years. I will stick with a growth / value / cornerstone (VOO) mix in all markets. Buy the dip by simply buying to my target allocations.
1902 shares of SCHD, here. It's our #2 position behind broad US, but *should* be #3. I went a little heavy in 2023 and haven't balanced it back out yet.
Love it Xal. Thank you for taking the time to watch the video and for dropping a comment. I know how you like to pick up value at the right time from lurking in the legend, Ryne Williams, chat (: I think SCHD will become more favorable in the coming years (of course I have no idea WHEN this will happen, specifically). Stay the course and keep growing!
@JeffTeeples Oh, wow. I'm famous. Or perhaps infamous. 😆
Yea, I do love me some value, especially smallcap. AVUV is the #3 I'm looking to overtake SCHD with, actually.
I actually have an update on that. It's 2013 shares of SCHD. My wife's IRA got maxed for '24 as of today, after 6 months of negligence. No worries, though. I got her automatic contributions back online, and we'll both max our IRAs in the current year. ❤️
Oh man Xal, music to my ears! Maxing those Roth IRAs! Love it. I did mine last week, and will get the wife's finished by the end of the month! I like to drop them in early and forget about it. Makes me a bit cash poor, but I can replenish that over the year and let the Roth work its magic.
Happy New Year Jeff. Your recent video on your first Roth conversion inspired me to finally open a Roth and my plan is fund that first (other than my 457acct) with back door contributions. Once my 8000$ is in I’ll move over to my brokerage for remainder of the year.
Hey Kevin. That is awesome! Roth IRAs are nice because we can take the money out tax and penalty free well before the age of 59.5, unlike traditional IRAs. Also, the government will never *make* us take the money out with RMDs. I plan to eventually convert all traditional IRA to Roth IRAs (for my stuff, and my wife's 401k eventually).
Jeff, SCHD/JEPQ/SCHG/VGT!
Oh man, that is music to my ears. Love the mix. Keep pumping dollars into that thing and stay the course.
For the total returns, are you calculating dividends reinvested?
This is a great question. I am towards the end of the video when I use the Seeking Alpha charts to show total return. The dividend growth on my earlier spreadsheet and in Seeking Alpha is strictly comparing 2024 dividends to 2024 dividends. In the case of SCHD, it was just over 12% 'dividend growth' in that case.
Short answer: No during most of the video, but yes, fully reinvested is assumed at the end on the total return charts.
Thank you
Dead Years Old 😂 keep up the great work Brother.
LOL. I said that and then thought 'hmm, wonder if I should redo that part'. I usually just shoot from the hip. Thanks for watching and for the comment (:
Hi there. I have a 7 - 10 yrs until I retire at 65. Which dividend ETF would you recommend? Btw I don’t have 1M
Hey Patri. Thank you for watching and for the question. This is impossible for me to say without the details. But, generally speaking, staying the course with a balanced portfolio will be the way to make it to retirement. Probably lean more to value or dividends as you get closer (assuming you are heavier in growth during the accumulation phase).
My favorite retirement ETFs are as follows: SCHD for dividend growth, JEPQ for high yield if you need more 'cash now' until social security and other things kick in, and VOO for a solid cornerstone. If you still want growth, SCHG or QQQM are great (I use VGT in the accumulation phase, but most aren't interested in 100% technology in retirement).
Nice. Love SCHD. Especially since it’s on sale now. 😂 When you get a chance , can you tell me your thoughts on SPMO as compared to VOO. I have been doing some back testing and it seems good. Not sure if I should do some in VOO and some
In SPMO
Hey Mohit. You're speaking my language. Every year that SCHD underperforms is another year I'm licking my chops and buying more.
I've been watching SPMO for a while now. It is really impressive and it has severely outperformed VOO on any stretch of time that I examine. I know momentum is a 'winning factor' in general, but I am a bit hesitant to dive in until I see a major market downturn (beyond what 2022 gave us). I'm not saying SPMO will fail, but I just want to see things play out a little more before diving in myself.
I will say, in 2022, SPMO did outperform VOO by a lot. But it did underperform VOO by a quite a bit in 2016, 2019, 2021, and 2023. It seems to get, well, momentum a bit sporadically. It crushed VOO in 2024, which gives it outperformance in all time stretches overall. I just want to see a little more history. But it looks great.
@ That’s what I observed as well while doing back testing regarding SPMO. However rolling return on average is up by 3% for past almost 10 years. May be I will do some in SPMO to see how it works out and will keep some in VOO. It might overlap but if SPMO strategy really works out then may be it’s worth it. Please do make analysis SPMO and XMMO in your video if you ever get chance. Thanks for your great work always
Hello! Would you recommend someone that is not US based to invest in SCHD? For example I'm a Singaporean looking to invest in SCHD for my dividend Portfolio and understand there is up to 30% tax for my dividends. Should i still buy regardless?
Thank you for watching and for the question. I haven't ran the numbers enough to have a strong opinion on this one. My gut says I would go with a low-cost index fund to build stable wealth over many years in that situation.
9:30 Marjorie (sp?) constitution?
@@adamtatusko ty I was lost in the sauce.
Hey Josh. You had me confused too, lol. I see Adam mentioned the March* reconstitution below. Once per year SCHD will do a massive overhaul by dropping some holdings and adding in new ones.
One question I always had about prioritizing dividend growth over higher yield:
Let’s say you have a 2% yielding stock with a fixed 10% Div growth, and wanted to compare that to a 10% yielding stock with 0% growth. Wouldn’t it take about 17 years ( 1.1^17 = 5, and 5 x 2% yield = 10% yield) to match the 10% yielder? And in those 17 years, you’re getting the upside of having the 10% divs while the 2% Div growth stock is playing catch up. So if you started with $100k invested in each, it’d be obvious that it would take quite a while to surpass total divs using the 2% grower vs the 10% high yielder. Am I missing something?
Your spreadsheet shows amount received each year, but doesn’t show cumulative amount received since initial investment. That’s an important metric when comparing the ETFs/scenarios.
Btw, I like your Power metric concept. Could you create like 4-5 scenarios where you set up each of them with the same Power value and different permutations of Yield and Growth? This would be a more scientific comparison as your ETF scenarios have different Power values so multiple variables that clouds the assessment.
Hey Simon You're spot on here. It takes a looooong time to to grow to the point of the high yield for a low yielding dividend grower. There are a couple primary reasons to go with dividend growth over yield, even knowing the gap takes time to cover:
1) Compound math is WILD once it does catch up. You will crush inflation with dividend growth and eventually run out of money (potentially) with high yield that doesn't outgrow inflation. Compound is goofy and feels fake when you see the high grower in the millions 40 years later and the high yield always uses 'simple math'.
I think ultimately a balance is the way to go (some JEPQ, some SCHD) and then lean to growth as you comfortable cover bills.
2) High yield gives a surplus early on compared to high dividend growth. But something to keep in mind is that *usually* the total returns are better for something with a 3% yield compared to a 10% yield (assuming similar underlying indexes and value tilts). My model in this video didn't account for the (typical) total return advantage of the growers. So it 'looks' bad by comparison because we don't see the price double every 7 to 8 years like it does in reality.
I'm making the high yield show 'most' of its total return, while the dividend grower isn't getting credit for the price appreciation in this simple model.
I didn't show this because it would be deceptive. Yes, the yield looks WAY better for the high yielding dividend payer. This is because most of the total returns are within that yield. The grower will *usually* make up for it and then some over time with total returns (adding price appreciation). This simple model assumed no reinvestment and didn't track price. So it favors high yield on the 'eye test' already, and I didn't want to make it even less *realistic*.
I will tinker with the dividend power formula. I thought of it spur of the moment because I always neglect yield in these videos. Yield definitely matters, so I wanted to add it in somehow.
Hi Jeff! JEPQ crushed SCHD on dividend yield (9.6% vs 3.6%) in 2024. I'm tempted to move a big chunk of SCHD to JEPQ to get the fat dividend. I am 61 years old and retired. What is the risk?
Hey Jim. I love JEPQ. It is my favorite high yield ETF. JEPQ has crushed SCHD on total return in the past couple years with it being a growth heavy market. I hold and love both SCHD and JEPQ (will be my primary holdings when my wife and I fully retire).
The yield of JEPQ will always crush SCHD in a given year. This is because it produces the income (over 90% of it) by selling call options against the Nasdaq-100 holdings. Therefore the dividend will not grow as much as SCHD as far as yield on cost. JEPQ is for needing more cash-flow *now* and SCHD is for building cash-flow in the future and for crushing inflation. I like a mix of both.
SCHD, with the low 3.6% yield, has doubled its 'per share' dividend payments every 6.5 years since inception. So the 'yield on cost' doubles every 6.5 years for each share held. The 'yield' will stay in the 3%s because the price appreciates as well. It is a dividend grower rather than a high yielder.
JEPQ also pays mostly 'ordinary' dividends instead of qualified. This will increase the taxes on the dividends unless it is in a tax protected account.
I like both, and I think they complement each other well (SCHD is value, JEPQ is growth holdings).
@@JeffTeeples I think I get it Jeff. You are saying that a share of SCHD will pay increasing dividends each year, while a share of JEPQ pays the same dividend year after year. So SCHD dividend's pay more then JEPQ over time. That is a complicated concept. Thank you so much for the lesson. Yep, that's a bummer about the tax disadvantage of JEPQ dividends treated as regular income. Hopefully we keep that 12% bracket 4 more years!
Anyway I could message you? I have some questions about pursuing a career as an accountant
@jeffteeples
I'll be honest here; I don't have a ton to say about college or accounting. Truth be told, I quickly gravitated to finance in 'the real world' when I got obsessed with economics, statistics, systems, and Excel (: I didn't spend a ton of time in 'accounting' per se.
Hello Jeff,
I'm hoping you get a chance to answer my question below. It's an important one that needs to be cleared up. Thanks.
Hey Cyrus. Thanks for the comment (and question). I answer everything I see. Beware that if you reply to an old post sometimes I will never see it (UA-cam's filters are awful).
@@JeffTeeples great. This was my question from earlier:
Hi Jeff, I like your content as it's very high quality, but I'm confused about something ...
I don't know which video I watched, but you compared SCHD to JEPQ and how SCHD overtook JEPQ in dividends due to dividend growth after a few years ...
Correct me if I'm wrong, but ...
I don't think you took the growth component of JEPQ into consideration. That is, If the yield stays constant without any growth, the stock has grown hence 9.5% of a higher value in the stock will result in a higher payout. When we use portfolio visualizer and re-investment payouts or not, JEPQ has outperformed SCHD with an increase in yield each year due to the ETF value going up. higher. 8% of a higher value is a higher distribution, right? That is why it's best to look at total returns to compare apples-to-apples at the end, right? I even plugged in EOS (a closed-end fund that uses covered calls on tech stocks that have been around a lot longer) due to a much longer history, as it has similar performance to JEPQ You can see the higher distributions each year due to the growth of the asset itself. what are your thoughts on this?
If I'm missing something regarding your comparison and analysis, please let me know.
You are spot on. JEPQ has been incredible in the short time it has been around (especially on portfolio visualizer, which starts in 2023) compared to SCHD because it is based on growth holdings (Nasdaq-100). That index, QQQM, has CRUSHED SCHD in the past couple years. SCHD (value) has had a rough go during that duration.
I think I showed when the dividends of SCHD would pass the dividends of JEPQ (no reinvestments, same amount of shares). But the total return is what matters because we can reinvest the dividends to get more cash-flow (not via per share growth, but by having more shares).
Be careful to note that 'generally speaking', that hurts high yielders compared to lower yielders. Because total return is what ultimately matters, and 'usually' high yielders have lower total returns compared to a similar comp not creating cash-flow by design (lowering growth ceiling in favor of cash-flow).
For example, QQQM beats JEPQ. VOO beats JEPI. Etc.
But you are 100% right, with reinvestments, JEPQ has been MUCH better than SCHD in the short 2 booming growth years. Remember, SCHD outperformed VOO (total returns) on the 11 years before that (:
I love JEPQ, and own it in my Roth, but it is very young. I think QQQM will outperform it (total returns) over many decades, but I like the downside protection of JEPQ as I get closer to retirement.
@@JeffTeeples Thanks for the quick reply. Yes, I agree with your points. But I was making a different point.
I'm not saying one is "better" than the other. That's a different topic. What I was saying is that irrespective of whether you re-invest the dividends or not, say you don't, the distribution (dividends) from JEPI or JEPQ or EOS, etc. will increase each year if their % payout remains relatively constant and doesn't drop *and* the underlying asset increases in value. For example, If I get 9% on a $57 ETF (JEPQ) that yields about $5.13 per share this year. If JEPQ is up 10% next year and it still pays 9%, then I'll be getting $5.6 per share next year. I'm simplifying it, but you see what I mean. The point is that as long as the ETF price increases and payout (dividend) doesn't decrease, the $ amount I receive increases each year as well. So we can't say SCHD will catch up and surpass in yield because it grows its dividend and JEPQ (or others like it) will give out static payouts forever each year. Right?
Bottom line: as you said, it comes down to the total return. It doesn't matter whether we take out the distributions and spend them, re-invest, or the asset doesn't pay any dividend and you have to sell shares for 'income'. I understand each of these has its own implications, but when comparing apples to apples, we can't say SCHD will beat inflation because it grows its dividend, and JEPQ (or others like it) will not because its dividends do not grow. At the end it comes down to which one gives you the highest total returns, right?
I think you have a great understanding of it overall.
I would argue that we (reasonably) can say that SCHD will outpace inflation indefinitely. Not meaning 'guaranteed each and every year', but looking at the big picture with the 11.5% dividend CAGR since inception, and a methodology that supports that model moving forward. And we can 'reasonably' say that the per-share dividend of SCHD will pass JEPQ over time, pretty easily. It is the specific amount of years that is debatable. Again, without dividends being reinvested.
SCHD has doubled its dividend per share every 6.5 years since inception. It's yield on cost is already ahead of JEPQs current yield (to be clear, assuming we bought the shares over a decade ago). The yield on cost of JEPQ 'may' go up, but over 90% of its dividends are based on the volatility of the market, while under 10% are based on companies growing the dividends (the underlying holdings of the Nasdaq-100).
Total return is king, because in reality we can reinvest the dividends in JEPQ (using the high yield) to create more 'dividend growth' (total cash-flow based on more shares). The TTM dividend CAGR for JEPQ has been negative for a while now, although, I see it literally just turned positive this month. But I do think it will vary quite a bit based on the juiciness of the options market.
Bottom line, I love and will have both in 'roughly' equal proportions when I retire (: I'll take ~6.5% yield and ~6% dividend CAGR (weighted 50/50).
I wish you had included GGDV also.
Thank you for watching and for the comment. I am unfamiliar with GGDV. Is this a ticker?
@@JeffTeeples Yes. An ETF.
www.google.com/search?q=cdgv&oq=cdgv&gs_lcrp=EgZjaHJvbWUqFggBEEUYJxg7GEYY-gEYnQIYgAQYigUyBggAEEUYOzIWCAEQRRgnGDsYRhj6ARidAhiABBiKBTIHCAIQABiABDIHCAMQABiABDIHCAQQABiABDIHCAUQABiABDIHCAYQABiABDIHCAcQABiABDIHCAgQABiABDIHCAkQABiABNIBCDYwOTBqMGo3qAIIsAIB&sourceid=chrome&ie=UTF-8
Ooooo, I know CGDV. You had GGDV above, I don't know CGDV for it to click. That is one I'm watching, but a bit more growth oriented and lower yielding by comparison for this video. Although who knows what the future will bring! It looks solid so far.
@@JeffTeeples Oops. Sorry about the typo. I did not see that. Obviously a Guru like yourself would surely know about CGDV.
DGRW Acc is the way to go in Europe!
Hey Tom. DGRW is a nice ETF. Can't go wrong with that one. Thanks for watching and for the comment.
One problem with your analysis is that many dividend investors are those using the dividends for paying bills in retirement. They aren't reinvested, but rather, used to pay the bills, etc. Growth over 10 years is not really an issue. THAT is why I invest in both SCHD and VYM, to get the best of both worlds over a relatively short term (LESS than 5 years.) We want to use the money, not just keep it in the brokerage account forever.
I agree that there is a lot more to reality than this simple model. Thanks for watching and for leaving a comment.
One question, and I don't mean this as an attack at all, but why does needing yield now to pay the bills make VYM a better option than SCHD? SCHD has a higher yield by a decent amount, and a higher growth rate. You lost me a little there.
Again, if you added something high yield (that doesn't grow the dividends as much), I would completely follow the logic. I'm not saying you're wrong, just questioning the role of VYM with your specific goals. Thanks!
“6.9%.. Nice”. 😂
Very nice! Thanks for watching (:
If you have less than 15 years to retire, SCHD is not your investment vehicle to produce enough income to retire on
If you have 20+ years , SCHD will leave the others behind and it will outpace inflation
It's all about fine-tuning the mix. I think 15+ or 20+ years *before* retirement will call for more growth ETFs and/or VOO + VTI in the accumulation phase. SCHD is solid as well. I have had it in my mix that has crushed the performance of VOO, VTI, and VT (not just in theory, in reality). But, 100% SCHD probably isn't the way to go in the accumulation phase.
But in actual retirement, that is where we will want 'as much dividend growth' as possible while having enough high yield to pay the bills real-time. Adjustments can be made each year to 'tilt' to yield or dividend growth based on each individual situation.
@@JeffTeeples ideally, SCHD is not the only fund. 40% SCHD, 60% VOO or similar. or 40% SCHD 30/30% VOO QQQM
If someone has less than 15 years to retire, maximize growth and then switch to safer more stable income investments. SCHD snowball effect starts to really accumulate after year 20.
Anyone who has a 30 year time horizon should plunk down as much as they can into their Roth for the first three years int SCHD. Then years 4-30 do 40-60 or 40-30-30 split between SCHD and VOO or SCHD and VOO/QQM. Eventually VOO and QQQM will surpass SCHD in value in the portfolio and then its time to think about rebalacning
SCHD + VGT basically equals VOO
Thanks for watching and for the comment. I love the combination too. I don't mind the strong tech tilt on the growth side of things. I'm a future tech bull myself.
SCHD important fact is that the increase in dividend is not because of the underlying holdings dividend growth in 2024. They did replace lower yeilding stocks like Broadcom and Merk which has amazing dividend growth and growth and switching them for high yeilding stocks with slower dividend growth. Someday that dividend growth will stop really quick. No wonder the etf underperform many dividend etf on total returns for years now.But for retirement income it’s a great etf. If you take all holdings in isolation and check their dividend growth in 2024 you will see i’m right. More like a high dividend etf. SCHD dividend growth in 2023 of only +3.77% prove my point.
Selling broadcom really killed total returns
I think you make some excellent points. To sum it up, you’re saying SCHD’s dividend growth isn’t sustainable because it relies heavily on the annual swapping of low yielders for high yielders during reconstitution. You’re right-this does play a significant role in SCHD’s impressive 11-12% annual dividend growth rate over its 13-year history. However, it’s also important to note that SCHD captures organic dividend growth from its holdings as well. This blend of organic growth and strategic yield swapping creates, in my opinion, an ideal combination-the best of both worlds!
SCHD has maintained an outstanding track record. You mentioned 2023’s 3.77% growth rate as proof of your point, but this is the only year since inception where SCHD had less than 6.9% dividend growth. Is using one outlier really proving a point? In 2024, for example, SCHD achieved over 12% dividend growth, significantly outperforming ETFs like VIG and DGRO, which delivered growth in the 5% range, and VYM, which had growth under 1%.
SCHD’s ability to consistently grow dividends-even in challenging market environments-demonstrates the strength and resilience of its methodology.
I think you make a lot of great points here! It is why, unless in retirement and truly looking for increased dividends only, I don't think SCHD is a great '100% of the portfolio' holding. In the retirement scenario it is great.
But I'm not sure you have a deep understanding of how the methodology works. Well, I'm torn, because it seems like you do, but then you neglected your own conclusion. Every year, in March, it will drop companies that don't meet the criteria for the screening and scoring process. To your point, it drops companies like AVGO. Hindsight is 20/20, and that ended up being a rough drop. But realize it was dropped because it didn't meet the top 50% of yield for the companies that made the initial screens. It crushed all other requirements.
I'm trying to think of an easy way to explain the math. It's dividend CAGR is 11.5% since inception over a decade ago. The process 'consistently grows' the dividends while keeping the holdings at a value tilt (run ups naturally work themselves out via the cutoffs). It's not a red flag when the changes are made *because* the formula focuses on consistently paying and growing dividends while keeping a clean balance sheet. There will always be plenty of companies going up and down, and there will always be 100 holdings that score well compared to the others on the specific screens and scoring. Just like there will always be 500 of the largest companies in market (S&P 500 changes often).
I don't think you are *wrong* about what you said. I do think it is important, especially for younger people, to surround it with growth ETFs. Or, just roll 100% VOO or VTI for a 'similar value mix'.
But remember, SCHD outperformed VOO in its first 11 years in total returns. This is a fact. And, using the underlying index, it dominated if you stretch it back to 1999, however, this is a bit 20/20 because dot.com, but still. The underperformance is *VERY* new in the last 2 years. Where were you during 20+ years compared to 2 (:
What will happen in the future? Great question. Answer: No clue. I'll hold multiple quality ETFs.
If ScHD abandons its methodology (eg not reconstituting every year) you may have a point, but the ETF drops stocks that aren’t in the top 200 highest yielding stocks in the index and replaces them with those that are in the top 100. I suspect this alone will help it maintain a high dividend growth rate.
Looking to add 100 shares of jepq and sypi I already have 100 each visa abbvie main microsoft that's it
Hey Sia. Nice mix you have there. MSFT and V are in my stock portfolio as well. You sprinkle in a nice mix of dividend growth and dividend yield between those 4 individual stocks. I love JEPQ in my Roth IRA as well. I'm excited to see how it plays out over the coming years.
Hey Jeff, what are your thoughts on JEPQ actually being growth, especially more than 2%.
Considering they do get some of the upside, albeit being limited because of the CC’s
He did a video on this last week or two I believe
I prefer jepq and fdvv over schd but that’s me. FDVV beats SCHD in the 1, 3 and 5 year returns so I’m surprised it’s not used as comparison in this. I used to be heavy into SCHD like many but now I prefer FDVV and it is doing a lot better
I consider JEPQ to be a growth ETF. At least this is how I implement it into my target allocations. I should reiterate, I think QQQM is better if we are dollar cost averaging in for over 10 years. But for us (wife and I), we looking to retire soon, and we want the raised floor from the call options. I'll give up ceiling. So I guess it is a 'mild growth' ETF (: I wouldn't be mad if people considered it for any category. Heck, could even go cornerstone, the thing has been lockstep with VOO since inception.
It has one of the more popular underlying growth indexes of the past 40 years. I look at the holdings and the PE ratio (very high) and say 'growth with a cash bonus'.
If you wanted all out growth you wouldnt go for SCHD. But that the point, you are not going for all out growth, you are going for reliable income.
For sure. Thank you for taking the time to watch the video and for the comment. I think a balance is important for any risk tolerance and goals.
Very generally speaking, more growth for younger folks and more value and or dividends for retired folks. Then hybrid portfolios between based on the situation and needs.
@ thank you Jeff, keep the content coming, I can’t access SCHD from UK but wish I could.
Has the streak of 50/50 VGT + SCHD outperforming the S&P been broken in 2024?
It has. I have to make a sad video here in the near future to mourn this terrible event! (:
@@JeffTeeples love the vgt schd combo, I made it my Roth IRA. In 2025, we will return to glory 😄
I hold dgro, SCHD and vig so I don't need to know which is better in different time-frames
Love it! These are three quality dividend growth ETFs. Stay the course with that and watch that income (and portfolio value) growth over the years (:
I retired early from investing. Don't be fooled by the dividends. The bottom line is Yearly Returns!!!
So your 100% into crypto and NFT’s, genius
Thanks for watching (if you did) and for the comment. I don't think you're completely off base here, in general, during the accumulation phase. But goals and risk tolerances will vary depending on where someone is at in the timeline.
Let's hope not, lol. But never know with a vague blanket statement like that about dividends. I hope they are more on VOO or VTI (which have underperformed my mix, which has better dividends, but that is another story for another video).
Thanks!
Happy New Year Jeff. All the best to you and your family.
WOW. Thanks Lance. Welcome to 2025 to me! Seriously, your support is unreal. You are a pillar in this community with or without extra $, but thank you thank you!