Dividends: A Necessary Evil?

Right, dividends. Everyone’s chasing them, aren’t they? Like they’re some sort of financial holy grail. Honestly, it’s a bit pathetic. We pretend it’s about long-term value, but let’s be real, it’s about needing a little something to show for all this… risk. I mean, the market’s a casino, and dividends are the free drink they give you while you’re losing your shirt. So, we’ve got two ETFs here – the Schwab U.S. Dividend Equity ETF (SCHD 0.48%) and the ProShares S&P 500 Dividend Aristocrats ETF (NOBL 0.41%). Let’s dissect this little charade, shall we?

The thing is, there are different flavours of dividend-seeking. You’ve got the ‘growth’ types, companies that pretend to be innovative while quietly returning cash because they’ve run out of genuinely good ideas. And then you’ve got the high-yielders – the ones that are basically screaming, “Please don’t look too closely at our balance sheet!” It’s like choosing between a slightly mouldy peach and a suspiciously shiny apple. Both are fruit, I suppose. And both will probably give you a stomach ache.

Quality High Yield vs. Long-Term Dividend Growth

The Schwab ETF, bless its heart, tries to be sensible. It looks for companies that have actually bothered to pay dividends for a decade. A decade! In this market, that’s practically an eternity. It then throws in some financial metrics, presumably to convince itself that these companies aren’t complete basket cases. It’s weighted by market cap, which means the biggest, most overvalued companies get the most say. Naturally.

It’s underperformed lately, hasn’t it? Shocker. All that sensible dividend-paying goodness fell out of favour when everyone decided that AI was going to solve all our problems. Apparently, a solid, stable company isn’t sexy enough. A big chunk of it’s in energy and consumer staples – things people will always need, like electricity and… toilet paper. Which is reassuring, in a bleak sort of way. But it’s also… boring. And the market hates boring. Unless it’s a yacht. Then it’s perfectly acceptable.

Then we have the ProShares ETF, the darling of the dividend aristocracy. It tracks companies that have increased their dividends for 25 years. 25! That’s… impressive, I guess. It also means they’re probably ancient. Like, dinosaur-level ancient. They’ve reached a stage where they can comfortably return cash because they’ve squeezed every last drop of innovation out of their business models. Top holdings like Albemarle, Cardinal Health, and C.H. Robinson Worldwide? Solid companies. Utterly predictable. And, frankly, a little depressing.

Which ETF is the Better Buy?

Look, both of these ETFs are… fine. If you’re the type of person who needs the reassurance of a regular income stream, go for it. The ProShares ETF might do well if everyone suddenly decides to panic and run for the hills. Which, let’s be honest, is always a possibility. It’s got that “value” tilt, which means it’s full of companies that everyone has forgotten about. That’s not necessarily a bad thing. It just means they’re not making headlines.

But if I had to pick one? I’m leaning towards the Schwab ETF. That 3.7% yield is… tempting. And the strategy of focusing on quality and dividend durability is… well, it’s less insane than most things I see in this market. It’s performed well in the past, and there’s a decent chance it will do so again. Although, let’s not pretend past performance is any guarantee of future success. That’s just what the brokers want you to think.

Honestly, though? I’d probably just put the money in something completely ridiculous. Like vintage teacups. At least then I’d have something pretty to look at while the market crashes. It’s all a game, isn’t it? And I, for one, am starting to suspect we’re all losing.

2026-01-19 19:52

Quality High Yield vs. Long-Term Dividend Growth

Which ETF is the Better Buy?

Read More