Three Dividend ETFs Beat S&P 500 Over One Year but Lag Over Five
DVY, SCHD and VYM outperformed an S&P 500 tracker over the past year, according to a published comparison, but their five-year results highlight the trade-offs behind dividend-focused investing.
Three large dividend exchange-traded funds outperformed an S&P 500 tracker over the year ended October 23, 2026, according to a comparison published by 24/7 Wall St. Their longer-term results were less favorable: all three trailed the benchmark over five years.
The comparison covered the iShares Select Dividend ETF, ticker DVY; Schwab U.S. Dividend Equity ETF, SCHD; and Vanguard High Dividend Yield ETF, VYM. Each managed more than $10 billion, the publication reported, putting substantial pools of investor money behind different approaches to dividend investing.
SCHD led the one-year comparison with a 35% total return, followed by DVY at 18% and VYM at 17%. The iShares Core S&P 500 ETF, IVV, returned 14% over the same period. The publication said its calculations included reinvested distributions, making them measures of overall performance rather than share-price changes alone.
Over five years, the ranking changed. IVV returned 80%, ahead of VYM at 72%, SCHD at 62% and DVY at 61%, according to the comparison. The reversal illustrates how a favorable recent period can coexist with a longer stretch of benchmark underperformance.
The funds also pursue distinct objectives rather than offering interchangeable exposure. BlackRock describes DVY as tracking an index of relatively high-dividend-paying U.S. stocks. Schwab identifies the Dow Jones U.S. Dividend 100 Index as SCHD’s benchmark, while Vanguard says VYM tracks stocks characterized by high dividend yields.
Those mandates matter because selecting companies for their dividends changes the investment universe. Vanguard explicitly warns that emphasizing dividend-paying stocks could cause VYM to underperform funds that do not consider companies’ dividend-payment records. Income-oriented stock selection therefore comes with a performance trade-off, not a promise of broader-market returns plus additional cash.
The comparison reported trailing yields of roughly 3.3% for DVY, 3.0% for SCHD and 2.3% for VYM. Such figures describe past distributions relative to a share price; they are not guaranteed future payments. A yield also cannot, by itself, establish whether an investment has delivered a stronger overall result.
The mechanics of distributions reinforce that distinction. In an investor bulletin, the Securities and Exchange Commission explains that a fund’s net asset value decreases when it distributes dividends, interest or capital gains. For exchange-traded funds, the market price typically declines as well, meaning a payout should not be treated as a separate gain without considering the investment’s remaining value.
Performance methodology deserves similar attention. Vanguard’s VYM fact sheet states that its performance figures assume reinvestment of dividends and capital-gains distributions and are presented before taxes and after expenses. Investors comparing published returns need to distinguish that reinvestment assumption from an approach that spends distributions as income.
The next test is whether these dividend strategies can sustain their recent relative strength across a longer period. Vanguard’s own risk disclosure cautions that dividend emphasis can produce underperformance, while the reported five-year comparison already shows that possibility. Future distributions and total returns, rather than the latest yield alone, will determine how the funds ultimately compare.
Primary source: Yahoo Finance Markets. Newzly rewrites and structures source reporting for clarity; verify critical details at the original.