SCHD’s Three Years Behind the Market
SCHD fell far behind the S&P 500 from 2023 to 2025. Based on market data, SCHD returned around 4.6% in 2023, 11.7% in 2024 and 4.3% in 2025, while the S&P 500 returned 26.3%, 25.0% and 17.9%.
Over those three years combined, $10,000 in SCHD grew to around $12,200, while the same amount in the S&P 500 grew to around $18,600. The main reasons lie in SCHD’s own rules: it holds almost none of the large technology companies that drove the market’s gains, and its sector mix was concentrated in areas that lagged.
FRC’s How to Invest in SCHD course is built from Schwab’s own SEC filings and S&P Dow Jones Indices’ index rules, and compares SCHD’s record with the S&P 500 and other popular ETFs year by year. The course page has a short video you can watch to decide whether the course is right for you.
This guide is part of FRC’s complete guide to SCHD, which starts with what SCHD is and how it works. It explains why SCHD trailed the market and what its full record shows.
How Far Behind SCHD Fell
The gap in 2023 was the widest in SCHD’s history. Schwab’s SEC filings show a net asset value return of 4.58% for the year, against 26.29% for the S&P 500, a shortfall of more than 21 percentage points.
In 2024, SCHD returned 11.60% based on net asset value, against 25.02% for the S&P 500. In 2025, based on market data, it returned around 4.3%, against 17.88% for the index.
SCHD did not lose money in any of those years. Its returns were positive, and its dividend kept rising, but it fell far behind a market that was being driven by a small group of very large companies.
Reason One: SCHD Holds Almost No Large Technology Companies
The biggest reason is what SCHD does not own. Its index selects only from the higher-yielding half of eligible dividend payers, and the largest technology companies either pay no dividend, have short dividend records or have yields well below 1%.
By October 2026, SCHD held none of the companies often called the “Magnificent Seven”: Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms and Tesla. Those companies made up a large share of the S&P 500 and, driven by the boom in artificial intelligence, accounted for a large share of its gains in 2023 and 2024.
An investor in the S&P 500 owned all of them. An investor in SCHD owned none, so when those companies soared, the gap between the two funds widened sharply. FRC’s guide to why SCHD removed Microsoft shows how the yield rule keeps such companies out.
What Every SCHD Investor Needs to Know
Many investors bought SCHD expecting it to keep pace with the market while paying a higher dividend. It was never designed to do that, and three years behind the S&P 500 made the difference painfully clear.
Do you know how SCHD performed during its worst market declines, how long recovery took and what happened to its dividends? How to Invest in SCHD is a 21-chapter course built from Schwab’s SEC filings, historical holdings data and S&P Dow Jones Indices’ published methodology, covering SCHD’s holdings history, every reconstitution, its performance and dividends and the mistakes investors make, with study guides, practice questions and an assessment in each chapter. FRC’s three progressive ETF programmes take your knowledge further, from ETF Investing for Beginners, through ETF Investing Strategies, to Advanced ETF Investing.
FRC’s programmes and memberships are open to everyone, whether you are investing $500 or $500,000, and you can get started for less than the cost of a few shares. The question isn’t whether financial education costs money. It’s what a lack of it could cost you.
Reason Two: Its Sector Mix
SCHD’s rules push it towards sectors with higher dividend yields, such as consumer staples, energy, health care, financials and industrials. In 2023 and 2024, many of those sectors lagged the technology and communication services companies that led the market.
After the 2025 review, energy made up around a fifth of SCHD, up from around 12% before it, according to press analysis of the reconstitution. A fund that heavy in energy, staples and health care was poorly placed to keep up with a market led by technology.
The concentration in these sectors also explains why SCHD did so well in 2022. That year, rising interest rates hit technology companies hard, and SCHD returned −3.23% while the S&P 500 fell 18.11%.
Reason Three: Timing of the Annual Reshuffle
SCHD’s yearly reconstitution can also work against it. Because the index removes companies whose yields fall, it tends to sell companies after their share prices have risen sharply.
Broadcom is the clearest recent example. It joined SCHD in 2021 and was one of its largest holdings when it was removed at the March 2024 reconstitution, according to Schwab’s holdings lists, following a strong rise in its share price. Its shares then kept rising strongly through the rest of 2024, gains SCHD investors no longer shared.
This is a built-in feature of a yield-based index, not a mistake. The same rule that removes companies whose prices have soared also keeps the fund focused on higher-yielding companies, which helped in years such as 2022.
Reason Four: Higher Interest Rates
Many commentators also point to interest rates. When rates on cash and bonds rose sharply in 2022 and 2023, some income investors moved money from dividend stocks into savings accounts, Treasury bills and bonds that offered similar yields with less risk.
That may have weighed on dividend-focused funds generally. It is harder to measure than the other reasons, and it does not explain why SCHD lagged so much more than the market in 2024 and 2025, when technology companies continued to dominate.
If you’re putting your hard-earned money into SCHD without understanding how it works, you’re taking unnecessary financial risks. How to Invest in SCHD takes you inside the fund, its holdings, dividend strategy, performance and risks.
SCHD’s Full Record Against the S&P 500
The three-year gap was unusual in size, but SCHD has trailed the S&P 500 in most years since it launched. Based on calendar-year returns from 2012 to 2025, SCHD beat the index in only four years: 2013, 2016, 2021 and 2022.
Over those 14 years combined, SCHD returned around 12.0% a year, against around 15.0% for the S&P 500, based on market data. That means $10,000 in SCHD at the start of 2012 grew to around $49,100 by the end of 2025, against around $70,500 in the S&P 500.
The comparison is not the whole picture. SCHD is designed to produce a higher and growing income with a very different set of companies, and investors who wanted maximum growth were always better served by a broad market fund. FRC’s comparison of SCHD and VOO explains how the two fit different goals.
What the Gap Looks Like in Money
Over longer periods, the gap adds up to large sums for bigger investors. One analysis published in October 2026 found that $300,000 invested in SCHD grew to around $468,000 over five years, against around $574,000 in VOO, Vanguard’s S&P 500 ETF, a difference of more than $100,000.
Other analyses of the past ten years have put the gap at six figures for investors who started with several hundred thousand dollars. The cause in every case is the same: SCHD did not own the large technology companies that led the market.
Those figures measure total returns, including reinvested dividends. They show what SCHD’s lower growth cost investors who could have chosen a broad market fund instead.
Year by Year Against the S&P 500
Based on market data, SCHD trailed the S&P 500 by around 4.6 percentage points in 2012, beat it by around 0.5 points in 2013 and trailed it by around 2.0 and 1.7 points in 2014 and 2015. It then beat the index by around 4.5 points in 2016, before trailing it by around 1.0 point in 2017 and 1.2 points in 2018.
The gaps widened after that. SCHD trailed by around 4.2 points in 2019 and 3.3 points in 2020, beat the index by around 1.2 points in 2021 and by around 14.9 points in 2022, and then trailed by around 21.7 points in 2023, 13.4 points in 2024 and 13.6 points in 2025.
The pattern is uneven rather than steady. SCHD tends to lag in years when growth companies lead the market and to hold up better when they fall, which is why 2022 and 2023 look so different.
Dividends Do Not Close the Gap
Some investors assume SCHD’s higher yield makes up for its slower price growth. The return figures in this guide already include dividends, so the gap remains even after the income is counted.
SCHD’s yield is much higher than the market’s. At the end of June 2023, S&P Dow Jones Indices reported an indicated dividend yield of 3.77% for SCHD’s index, against 1.50% for the broad U.S. market, but that difference of around two percentage points a year was far smaller than the gap in total returns from 2023 to 2025.
The Right Comparison for SCHD
The S&P 500 is a growth-heavy benchmark today. A fairer comparison for SCHD is other funds that invest in established, value-oriented companies.
On that basis, SCHD’s record is much stronger. Schwab’s fund page shows SCHD’s ten-year return to 31 October 2026 at 13.70% a year based on net asset value, against 11.81% for Morningstar’s large value category average.
S&P Dow Jones Indices’ figures for SCHD’s index tell a similar story over long periods. To the end of June 2023, the index had returned 11.68% a year over 20 years against 10.16% for the broad U.S. market, although it had trailed the market over the previous ten years.
What Happened to SCHD’s Dividend
While its share price lagged, SCHD’s income kept growing. According to Schwab’s distribution history, its annual dividend rose around 3.8% in 2023, 12.2% in 2024 and 5.3% in 2025.
For investors living off dividends, that was the result that counted most. The fund’s annual payment has risen every calendar year from 2012 to 2025, including the three years it trailed the market, and it rose by around 49% from 2019 to 2022, a period that included both the 2020 crash and the 2022 bear market.
The slower growth of 2023 and 2025 is still worth noting. SCHD’s dividend growth has varied a great deal from year to year, from around 3.8% to almost 20%, and FRC’s guide to SCHD’s dividend growth covers every year in detail.
Planning to live off dividend income? Don’t build your strategy around a dividend yield alone. How to Invest in SCHD examines dividend history, reinvestment, portfolio construction, taxation and income strategies.
What Happened Next
The pattern reversed sharply in 2026. By 6 November 2026, SCHD’s total return for the year was around 31%, against around 9% for SPY, an ETF that tracks the S&P 500, according to market data providers, and it closed at a record high of $36.21 on 4 November.
Press analysis has credited a revival in large value stocks and SCHD’s larger weight in energy than the S&P 500. By August 2026, SCHD was ahead of the index by around 14 percentage points for the year, one of the widest gaps in its favour since it launched.
The 2026 reconstitution also changed the fund. It added Qualcomm, UnitedHealth Group and Procter & Gamble, raised the weight of technology and health care and cut energy. FRC’s guide to SCHD’s 2026 reconstitution covers every change.
Nobody can say whether 2026 marks a lasting change or a single strong year. SCHD’s history shows long periods of trailing the market interrupted by years such as 2016, 2022 and 2026 when its approach paid off.
Should You Sell SCHD After Years of Underperformance?
That depends on why you own it. Investors who bought SCHD for growth, expecting it to match the S&P 500, have good reason to question whether it fits their goals.
Investors who own SCHD for a rising income from established companies have seen it do exactly that, with a dividend that grew every year from 2012 to 2025. For them, a period of lower returns than the market may be an acceptable cost.
Selling after a long period of underperformance carries its own risk. Investors who sold SCHD at the end of 2025 after three years behind the S&P 500 missed its strong 2026, while those who held on were rewarded. FRC’s guide to SCHD’s price history covers its highs, falls and recoveries in full.
Common Mistakes About SCHD’s Underperformance
Expecting SCHD to keep pace with the S&P 500. It holds a very different set of companies and almost none of the largest technology stocks.
Judging SCHD on short periods. Three years behind the market were followed by a strong 2026, and 2022 showed the opposite pattern.
Comparing SCHD only with the S&P 500. Against value-focused funds, its long-term record has been strong.
Ignoring the dividend. SCHD’s income kept growing every year, including the years it trailed the market.
Assuming the higher yield makes up the difference. The return comparisons already include dividends, and SCHD’s yield advantage of around two percentage points a year was far smaller than the gap from 2023 to 2025.
Common Questions
Why did SCHD underperform the S&P 500? Mainly because it holds almost none of the large technology companies that drove the S&P 500’s gains in 2023 to 2025, and because its sector mix was concentrated in areas that lagged.
How much did SCHD trail the S&P 500 in 2023? SCHD returned 4.58% in 2023 based on net asset value, according to Schwab’s filings, against 26.29% for the S&P 500.
How much did SCHD return in 2024? SCHD returned 11.60% in 2024 based on net asset value, against 25.02% for the S&P 500.
How did SCHD do in 2025? Based on market data, SCHD returned around 4.3% in 2025, against 17.88% for the S&P 500.
Has SCHD ever beaten the S&P 500? Yes. Based on calendar-year returns, SCHD beat the index in 2013, 2016, 2021 and 2022, and it was well ahead in 2026 to early November.
Does SCHD hold Nvidia, Apple or Microsoft? No. By October 2026, SCHD held none of the “Magnificent Seven”, because each either lacks a ten-year dividend record or has a yield too low for SCHD’s index.
Did SCHD’s dividend grow while it underperformed? Yes. SCHD’s annual dividend rose around 3.8% in 2023, 12.2% in 2024 and 5.3% in 2025.
Do these comparisons include SCHD’s dividends? Yes. The figures in this guide are total returns, which include reinvested dividends for both SCHD and the S&P 500.
What is SCHD’s ten-year return? Schwab’s fund page shows a ten-year return of 13.70% a year based on net asset value, to 31 October 2026.
Why did SCHD do so well in 2026? Nobody can isolate a single cause, but the 2026 reconstitution added large companies such as Qualcomm and UnitedHealth Group, and the market’s leadership shifted during the year. By 6 November, SCHD was up around 31% against around 9% for SPY.
What does Warren Buffett say about the S&P 500? Buffett has long recommended a low-cost S&P 500 index fund for most investors. FRC’s guide to whether Warren Buffett likes SCHD looks at how SCHD fits that view.
How much was SCHD before the stock split? SCHD’s net asset value was around $85.02 a share before its three-for-one split in October 2024, and its shares traded on a split-adjusted basis from 11 October 2024.
Is SCHD a bad investment because it trailed the market? Not necessarily. It is designed for rising income from established companies, not for maximum growth, and its ten-year return to October 2026 was ahead of the average large value fund.
Your Portfolio Deserves an Educated Investor
SCHD trailed the S&P 500 by a wide margin from 2023 to 2025 because it holds almost none of the large technology companies that drove the market, and because its rules favour sectors that lagged. Its dividend kept rising throughout, and it recovered strongly in 2026.
Before buying another few shares of SCHD, consider investing in understanding the fund itself. How to Invest in SCHD examines its selection methodology, historical performance, dividend taxation and investment strategies, while FRC’s three progressive ETF programmes take you from how ETFs work to managing risk across everything you own. FRC’s programmes and memberships are open to everyone, whether you are investing $500 or $500,000.
A poor investment decision could cost you thousands, and selling a fund at the wrong moment is one of the most common. Know why SCHD behaves the way it does before you judge it against the market.
