The Schwab US Dividend ETF (SCHD) is often seen as one of the best income funds in the United States. This explains why its inflows continue rising, and currently stand at nearly $70 billion.
The SCHD has had good total returns in the past few years, with its annual dividend growth rate being one of the best in the industry. However, SCHD pays just 4% annually, lower than the 10-year yield of 4.47% and the 30-year of almost 5%.
Best SCHD ETF alternatives
Many dividend ETFs provide a higher dividend yield and total return than SCHD. Some of these funds are JPMorgan Nasdaq Equity Premium Income ETF (JEPQ), VanEck Morningstar Wide Moat ETF (MOAT), and Cohen & Steers Infrastructure Fund (UTF).
Read more: SCHD ETF analysis: 2 catalysts to move the dividend fund this week
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
The JEPQ ETF is one of the biggest actively managed funds on Wall Street, with over $25 billion in assets under management. It is a dividend-focused fund that uses the covered call approach to generate returns.
In a covered call, the fund invests in all companies in the Nasdaq 100 Index and benefits as it rises. After this, the fund then sells call options on the index, collecting a premium, which it distributes as a monthly dividend to investors.
The fund’s total return comprises the Nasdaq 100 gains, the covered call premium, and any dividends paid by companies in its portfolio.
JEPQ has constantly maintained a dividend yield of 11.40%, much higher than the 4% that the SCHD ETF pays. This high yield helps to compensate its more expensive expense ratio of 37%.
The JEPQ ETF has done better than the SCHD since its inception. Its three-year return is about 50%, much higher than the latter’s 11.2%. Its 12-month performance was 7.58%, bigger than the SCHD’s 5.68%.
VanEck Morningstar Wide Moat ETF (MOAT)
The MOAT ETF is a large fund with over $14 billion in assets and an expense ratio of a whopping 0.47%.
This fund aims to invest in companies that have a large market share in their industries. Most of these firms are in the technology, healthcare, industrials, consumer defensive, and financials.
The top companies in the fund are names like Boeing, Huntington Ingalls, Corteva, Monolithic Power Systems, and Disney. All these firms have a sizable market share in their industries.
The MOAT ETF has a lower dividend yield than SCHD and is more expensive. However, it has demonstrated its superior performance compared to SCHD, mostly because of its technology stocks allocations. Its three-year performance of 345 is higher than SCHD’s 11%.
Read more: ETFs of the week: Wide Moat (MOAT) and Cash Cows (COWZ)
Cohen & Steers Infrastructure Fund (UTF)
Cohen & Steers Infrastructure Fund (UTF) is not an ETF. Instead, it is a closed-end fund that invests in companies in the infrastructure space.
The main difference between these funds and ETFs is that they use leverage to optimize their returns. They also have a higher expense ratio, with UTF charging an annual fee of 2.29%. In UTF’s case, it has $3.3 billion in assets and a leverage ratio of 28.52%.
The UTF Fund invests in companies in the infrastructure space that is seeing high demand because of the artificial intelligence boom. Some of the top companies in the fund are NiSource, NextEra, Duke Energy, American Tower, and National Grid.
The UTF Fund has a higher dividend yield of about 7.5%, higher than SCHD’s 4%. It also has a record of doing better than the fund, with its three-year total return being 19%.
Read more: UTF: Is Cohen & Steers Infrastructure fund a good dividend fund?
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