Which ETF Has the Highest Dividend? Comparing SPYD and SCHD for 2026 Income Investors

Understanding Dividend ETF Yields: What Sets Them Apart

For investors seeking passive income, dividend-focused ETFs have become a cornerstone of long-term portfolio strategy. However, not all high-income exchange-traded funds are created equal. The question of which ETF has the highest dividend often comes down to comparing companies’ financial stability with yield potential—a balance that separates quality income-generating funds from value traps.

The two standout contenders in this space offer distinctly different approaches to dividend extraction. By examining their composition, expense structures, and historical performance, investors can determine which strategy aligns with their risk tolerance and income objectives.

SPYD vs. SCHD: Breaking Down the Highest Dividend Yield Difference

SPDR Portfolio S&P 500 High Dividend ETF (SPYD) delivers the higher dividend yield at approximately 4.5% trailing 12-month return, compared to Schwab US Dividend Equity ETF (SCHD) at roughly 3.8%. This 70-basis-point spread reflects fundamentally different selection methodologies.

SPYD achieves its superior yield by tracking the 80 highest-dividend-paying companies within the S&P 500 universe, with equal weighting across holdings. Trading near $43 per share with only $7 in annual fees per $10,000 invested (a 0.07% expense ratio), this passively managed fund concentrates heavily in real estate (21.4%), utilities (13.4%), financials (17.3%), and consumer staples (16.3%). Major holdings include CVS Health, Viatris, Invesco, Merck, Ford, AbbVie, and US Bancorp.

SCHD, trading around $28 per share with a 0.06% expense ratio, pursues a more stringent filtering approach. The fund targets companies demonstrating strong balance sheets, high profitability, and proven dividend consistency—selecting roughly 100 stocks that represent dividend leaders across energy (19.34%), consumer staples (18.5%), and healthcare (16%). With $73 billion in assets under management compared to SPYD’s $7.3 billion, SCHD holds blue-chip names like Bristol Myers Squibb, Cisco, ConocoPhillips, PepsiCo, Lockheed Martin, Coca-Cola, and Verizon.

The Trade-Off: Higher Yield Meets Capital Appreciation

The highest dividend yield doesn’t always translate to portfolio growth. SPYD has generated approximately 130% total return since its 2015 inception—substantially lagging the S&P 500’s 300%+ return over the same period. This underperformance stems partly from minimal tech sector exposure (under 2%), as technology has driven broad market gains for years.

SCHD demonstrates more balanced growth dynamics. With over 200% total return across the last decade—equating to roughly 11-12% annualized returns—it outpaces pure yield strategies while maintaining its dividend focus. The 58%+ portfolio allocation to mega-cap companies ($70 billion+ market capitalization) provides stability without entirely sacrificing growth participation.

Tax Implications: A Critical Consideration Often Overlooked

Investors should recognize a significant structural difference: SPYD’s substantial REIT holdings (real estate investment trusts) mean the majority of its distributions receive taxation as ordinary income rather than qualified dividend rates. SCHD’s more traditional corporate dividend structure typically benefits from more favorable tax treatment. For high-income investors, this distinction can meaningfully impact after-tax returns.

Making Your Choice: Which ETF Has the Highest Dividend for Your Portfolio?

Selecting between them depends on prioritization. Conservative investors prioritizing maximum current income and comfortable with lower capital appreciation should consider SPYD’s aggressive yield positioning within the vetted S&P 500 framework. The combination of accessibility (low share price), minimal fees, and unambiguous high-dividend focus makes it straightforward for income-focused portfolios.

Investors seeking a more comprehensive dividend strategy combining yield with growth participation should examine SCHD’s approach. The fund’s emphasis on financial quality and consistent payers provides stability across economic cycles—particularly valuable for those unwilling to sacrifice all capital appreciation for current income.

Regardless of selection, both funds represent low-cost, diversified entry points into dividend-generating company baskets. The “highest dividend” ETF isn’t necessarily the best choice; the optimal selection depends on how your income needs align with growth objectives and tax circumstances.