The Methodology Battle
You aren't buying a stock; you are buying an algorithm.
SCHD: The Strict Value Investor
SCHD is picky. It demands 10 years of history, but crucially, it screens for Cash Flow to Debt and Return on Equity. It behaves like a Value Fund.
- Pros: High starting yield. Avoids overpriced hype stocks.
- Cons: Often underweight Tech. Heavy in Financials/Industrials.
VIG: The Quality Growth Investor
VIG excludes the top 25% highest yielders. Why? Because extremely high yield usually means a company is in trouble. VIG wants "Quality."
- Pros: Captures Tech growth (MSFT, AAPL). Lower volatility.
- Cons: Low starting yield (under 2%). Hard to live off $1M portfolio.
The Verdict
If you need income within 5 years: SCHD
The 3.4% starting yield gives you a massive head start on compounding.
If you have 15+ years: VIG
The exposure to Tech growth and lower yield payout means higher price appreciation potential.