When evaluating investment strategies, dividend exchange-traded funds (ETFs) like the Schwab U.S. Dividend Equity ETF (SCHD) and the Fidelity Dividend ETF for Rising Rates (FDVV) often come into focus. SCHD has historically been a favorite among investors seeking steady income and dividend growth, boasting a yield that has nearly tripled since its inception in 2011. Its strategy is anchored on selecting companies with a strong track record of paying dividends, offering a defensive and yield-focused approach that appeals to risk-averse, long-term investors.

However, recent market dynamics, particularly since early 2024, have seen SCHD underperform compared to some other dividend funds. This shift became more noticeable following the imposition of tariffs, which introduced new volatility. In contrast, FDVV, with a yield of approximately 3% (lower than SCHD's 3.7%), has shown a robust balance between generating income and achieving price appreciation. Its higher allocation to the technology sector has been a significant driver of its recent outperformance, capitalizing on the tech rally that has characterized the market.

Ultimately, the choice between SCHD and FDVV depends on an investor's individual goals and risk tolerance. SCHD remains an excellent option for those prioritizing consistent dividend growth and seeking lower volatility, providing a reliable income stream even during market fluctuations. On the other hand, FDVV is better suited for investors who desire a blend of dividend income and potential for capital appreciation, especially if they believe the technology sector will continue its upward trend. Both ETFs offer compelling benefits, catering to different facets of a diversified investment portfolio aimed at long-term financial health and stability.