Better ETF Buy: Vanguard Dividend Appreciation or Schwab U.S. Dividend Equity

April is turning out to be a tumultuous month as President Trump’s sweeping tariffs on U.S. trading partners is creating chaos and confusion. The on-again, off-again nature of the import levies (a 90-day pause is in effect to allow for negotiations) and China retaliating by matching U.S. tariffs, which effectively shuts off trade between the two countries, has generated significant turmoil.

Stocks initially crashed hard on the news, only to quickly rebound, and then fall again. Trump added to the uncertainty over the weekend by seemingly carving out exemptions from tariffs for certain tech segments, only to say, “No one is off the hook.”

During such turbulent periods, investors tend to flock to the safety of dividend stocks, which history shows handily outperform non-paying stocks, particularly those that raise their payouts over time. 

Also, since the 1930’s, dividend stocks on the S&P 500 have never experienced a losing decade, including during the Great Depression and the so-called “Lost Decade” of the 2000s where the index itself generated negative returns.

For that reason, investors might be wondering whether the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) or the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) might be the better investment to ride out the storm and beyond.

The case for VIG

The Vanguard Dividend Appreciation ETF tracks the performance of the S&P U.S. Dividend Growers Index and  has total returns of 486% since its 2006 inception. The exchange-traded fund focuses on companies that have track records of growing their dividends every year. 

With a low 0.05% expense ratio, VIG is a low-cost way of buying into a basket of large cap stocks like Apple (NASDAQ:AAPL), Broadcom (NASDAQ:AVGO), and JPMorgan Chase (NYSE:JPM).

Although tech stocks account for 24% of the portfolio, which could introduce significant volatility, especially in today’s market, it is offset by consumer staples, healthcare, and utilities representing another 25% of the total holdings. Costco (NASDAQ:COST), UnitedHealth Group (NYSE:UNH), and NextEra Energy (NYSE:NEE) are also the biggest positions in those respective sectors.

Amid the tumult of 2025 so far, the Vanguard Dividend Appreciation ETF is down less than the S&P 500, and is up more than the benchmark index over the past year. 

That’s not surprising since, with a beta of 0.87, VIG is less volatile than the S&P. That means that even though the exchange-traded fund slightly lags behind the index over the past decade, it suffered fewer dramatic swings. Investors seeking stability might want to choose VIG for a sounder night’s sleep.

The case for SCHD

Amongst dividend growth ETFs, the Schwab U.S. Dividend Equity ETF is a star. First, it’s stock selection process limits itself to companies that have at least 10 consecutive years of dividend increases. SCHD then examines their cash flow-to-total debt, return on equity, dividend yield, and five-year dividend growth rate, ranking them accordingly. 

Only the top 100 stocks make the cut, weighted by market cap, and it reworks the numbers every year to refresh its growth profile. SCHD recently reconstituted its portfolio and kicked out stocks like BlackRock (NYSE:BLK) and Pfizer (NYSE:PFE), while bringing in ConocoPhillips (NYSE:COP) and Vail Resorts (NYSE:MTN).

At the end of last year, financials, healthcare, and consumer staples stocks represented 50% of its holdings. Tech stocks accounted for less than 9%. It should be less volatile than the S&P with its 0.83 beta, and like VIG, is outperforming the index this year.

That consistency has resulted in the ETF rewarding shareholders with a 13-year track record of raising its dividend. Over the past decade, it has increased by a 12% compound annual growth rate. The ETF’s focus on cash-flow-rich firms ensures payouts hold up, even if earnings dip.

The verdict

Investors would likely be well-served by choosing either ETF, but I would choose the Schwab U.S. Dividend Equity ETF for current market conditions. It has an enviable record of capital appreciation, income payment, dividend yield, and an equally low expense ratio of 0.06%.

It’s a rock-solid choice for investors seeking an oasis of calm during the storm and could be your safest investment today.

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