SCHD/SPHD: Two Great Dividend ETFs That Go Great Together

I recently wrote an article talking about the PowerShares S&P 500 High Dividend Low Volatility ETF (SPHD) and its prospects for the upcoming year. The comment thread got pretty active with several readers sharing how they used SPHD in conjunction with other dividend ETFs in their portfolios. One fund that kept coming up several times in that discussion was the Schwab U.S. Dividend Equity ETF (SCHD). Some said that they preferred SCHD over SPHD. Some said they owned both of them together. Others wondered if the two funds were a good fit.

What almost everybody agreed on is that SPHD and SCHD are both great funds. They’ve got 5-star ratings from Morningstar, and have long histories of delivering superior risk-adjusted returns and above average dividend yields. But throwing a bunch of highly rated funds together does not a portfolio make! There are the matters of risk balancing, correlation, overlap and style to consider. SPHD and SCHD are great, but are they great together? The answer is yes, and here's why.

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