Comparison of SCHD and GCOW ETFs for passive income, SCHD recommended for lower costs and focus

From Nasdaq: 2025-07-03 11:12:00

Two ETFs, SCHD and GCOW, focus on high-yielding dividend stocks with varying strategies, fees, and returns. SCHD tracks the Dow Jones U.S. Dividend 100 Index, emphasizing dividend quality, while GCOW selects stocks based on free cash flow yield. GCOW offers a higher current income yield of 4.2% compared to SCHD’s 3.9%. SCHD’s lower expense ratio of 0.06% makes it a better choice for passive income seekers.

SCHD and GCOW have different strategies for selecting high-yielding dividend stocks. SCHD focuses on U.S. companies with strong financial profiles, offering a 3.8% current dividend yield and 8.4% five-year dividend growth rate. In contrast, GCOW screens for high free cash flow yield, resulting in a 5% dividend yield. GCOW’s global approach includes U.S. stocks accounting for less than 25% of its holdings, compared to SCHD which is solely U.S.-based.

SCHD and GCOW have varying performances over different time frames. GCOW outperformed SCHD in the last five years with an 8.8% return since inception. However, SCHD has delivered better long-term performance due to its lower costs and focus on dividend growth. SCHD’s passively managed approach with a 0.06% expense ratio makes it a more attractive option for investors seeking passive income.

Considerations for investing $1,000 in Schwab U.S. Dividend Equity ETF include its focus on dividend sustainability and growth, lower expense ratio of 0.06%, and historical performance. SCHD is recommended for passive income seekers due to its emphasis on dividend quality and lower costs compared to GCOW. The ETF offers an attractive and growing stream of passive dividend income for investors.



Read more at Nasdaq: Better Dividend ETF to Buy for Passive Income: SCHD or GCOW