SCHD vs. QQQI: Dividend Growth or Monthly Cash—What’s Better?

How do you define a “better” exchange traded funds (ETF) for passive income investors? You might prefer an ETF with an established track record of dividend growth. Alternatively, you may choose a fund that offers a higher dividend yield and pays its distributions more often.

Your financial freedom could depend on your ability to pick out the right high-yield dividend ETFs for your portfolio. Two popular income-focused funds are superior to most, but investors should know the crucial differences between them. Knowledge is power, so let’s dig deep into the fantastic features of two high-powered dividend ETFs for 2025.

SCHD for Dividend Growth

Maybe you’ve heard about dividend funds that put cash in your account each and every month. To be completely honest, the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) isn’t one of those funds.

The fact is, Schwab’s U.S. Dividend Equity ETF pays out its cash distributions to investors once every three months. On the other hand, the fund’s yield is quite good, so patient shareholders will be richly rewarded.

There are 103 stocks in the SCHD ETF’s holdings, and this fund tracks the Dow Jones U.S. Dividend 100 Index. Consequently, if you own the Schwab U.S. Dividend Equity ETF, you’ll get exposure to stocks covering a wide variety of market sectors.

In other words, there’s a safety factor with the Schwab U.S. Dividend Equity ETF because it’s highly diversified. Browse through the fund’s holdings list and you’ll recognize all kinds of famous names, such as Home Depot (NYSE:HD), Verizon Communications (NYSE:VZ), Coca-Cola (NYSE:KO), Lockheed Martin (NYSE:LMT), and Chevron (NYSE:CVX).

Now, you may have noticed that the Schwab U.S. Dividend Equity ETF includes not just dividend payers, but also many dividend growers. As a result, while I can’t promise that the SCHD ETF will increase its dividends every quarter, I can say that the fund historically grew its dividend payments over the long term.

It’s exciting to consider that the Schwab U.S. Dividend Equity ETF’s dividend payments might continue to grow in the coming years. The fund already features a trailing 12-month distribution yield (i.e., a dividend yield) of 4.03%, which is certainly eye-catching.

Furthermore, SCHD only takes an expense ratio (i.e., an annual management fee) of 0.06%. All in all, you can get decent quarterly dividends and low-cost diversification with the Schwab U.S. Dividend Equity ETF. 

Monthly Cash Payouts with QQQI

Dividend growth is great, and it’s always nice to have an added layer of safety that comes with broad market sector diversification. However, while the SCHD ETF has its advantages, ultra-high yield seekers may prefer the NEOS NASDAQ-100 High Income ETF (NASDAQ:QQQI).

The annual expense ratio for the NEOS NASDAQ-100 High Income ETF is 0.68%, and this is much higher than the 0.06% expense ratio of Schwab’s U.S. Dividend Equity ETF. When you learn about QQQI’s huge expected annual yield, though, you might still choose this fund over SCHD.

After glancing at the full holdings list for the NEOS NASDAQ-100 High Income ETF, I discovered that the fund has around 100 stocks. They’re mostly large-cap technology stocks, which makes sense because the QQQI ETF invests in constituents of the NASDAQ 100 stock index.

Compared to SCHD, which has holdings spread across numerous market sectors, you won’t get as much diversification with the tech-heavy NEOS NASDAQ-100 High Income ETF. So, why should anyone prefer QQQI, which has higher management fees and may be less safe during a market downturn?

One reason to choose the NEOS NASDAQ-100 High Income ETF is that the fund pays out its cash distributions every month instead of just one every quarter. Therefore, QQQI’s shareholders have more chances to reinvest the distributions and multiply the effect of compounding.

That’s not the only advantage of the NEOS NASDAQ-100 High Income ETF. This fund also boasts an annual yield that’s superior to SCHD’s 4.03%. In fact, the currently expected annual distribution rate for the QQQI ETF is a whopping 15.35%.

SCHD vs. QQQI: Different Strokes for Different Folks 

Some investors might claim that the NEOS NASDAQ-100 High Income ETF has a greater margin of safety since its yield is substantially bigger. The point is that you’ll get a nice cash cushion every month with QQQI — very little waiting required.

What you’ll get with the Schwab U.S. Dividend Equity ETF, however, is dividends that will probably grow over the long term. Plus, you’ll get instant diversification with minuscule management fees if you own SCHD.

The “winner,” then, is the fund that fits your objectives. Do you want huge yield very soon, or dividend growth prospects for the future? After some reflection, you might decide that you want both.

That’s fine as you can choose to own some shares of the Schwab U.S. Dividend Equity ETF and a few shares of NEOS NASDAQ-100 High Income ETF. With this approach, there’s no need to limit yourself as SCHD and QQQI can both be wealth-building “winners” for your portfolio.

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