3 Dividend-Growth ETFs Compared
— SCHD vs. DGRO vs. VIG: What's the Difference?
Even within the same "dividend-growth ETF" category, there are 3 products built on different index-construction criteria. The dividend-growth strategy concept itself is covered in the dividend-growth strategy guide; this article covers only the actual differences among the three.
What the Three ETFs Have in Common — the Dividend-Growth-Strategy Framework
SCHD, DGRO, and VIG are all passive index-tracking ETFs that rules-based select companies that have steadily raised their dividend. The principles behind the DGI (Dividend Growth Investing) strategy itself and the DRIP compounding effect are covered in the complete guide to dividend-growth investing, so we won't repeat the concept here — this article compares only how the three products implement that strategy differently.
The Difference in Index-Construction Criteria
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| ETF | Tracked Index | Core Screening Criteria |
|---|---|---|
| SCHD | Dow Jones US Dividend 100 | 10+ years of dividend-payment history, weighted-screened for financial health (ROE, cash flow, payout ratio) |
| DGRO | Morningstar US Dividend Growth | 5+ consecutive years of dividend increases, with a payout-ratio ceiling (excludes excessive payouts) |
| VIG | NASDAQ US Dividend Achievers | 10+ consecutive years of dividend increases (a simple year-count criterion, no financial weighting) |
Yield vs. Growth-Rate Positioning
Different screening criteria lead to different resulting yield and growth-rate positioning. Because of its financial-health weighting, SCHD tends to hold more relatively higher-yield names, while VIG, which looks only at consecutive-increase length, mixes in low-yield, high-growth blue chips (like large-cap tech names), which tends to pull its yield lower.
| ETF | Yield (example) | Dividend-Growth Tendency |
|---|---|---|
| SCHD | Roughly 3.5% | Medium to high |
| DGRO | Roughly 2.2% | Medium |
| VIG | Roughly 1.7% | Low to medium (blue-chip-focused) |
Every time the index rebalances, the holdings and their weights change, and the yield ranges above shift along with them. The table is meant to give you a feel for the three products' relative positioning — always check each fund manager's latest fact sheet before trading.
Differences in Holdings and Sector Weighting
Because of its financial-screening nature, SCHD tends to weight toward traditional dividend sectors like consumer staples, energy, and healthcare, while VIG, applying only the consecutive-increase criterion, mixes in blue chips across a broader range of sectors like tech and industrials. DGRO has a relatively larger number of holdings (in the hundreds), giving it the most diversification of the three. All three ETFs share a substantial overlap in flagship dividend-growth names (Coca-Cola, P&G, Johnson & Johnson, and so on), so keep in mind that holding all three at once can mean more overlap than diversification.