SCHD and HDV beat VOO. Here is why I still don't buy high-dividend ETFs
Over the past year, SCHD was +33.82% and HDV was +28.14%. My main holding, VOO, was +16.84% (figures as of October 16, 2026, assuming dividends were reinvested).
When I saw the numbers, I honestly thought, “That’s a huge gain“. VOO is losing.
That said, I have no plans to switch. I have never held, nor even considered buying, the three representative high-dividend ETFs: HDV, SCHD, and JEPI. I will explain the reasons using three yardsticks.
Yardstick 1: Can it be held in a NISA?
HDV changed its distribution frequency from quarterly to monthly on June 16, 2026. Since the NISA growth investment quota rules exclude monthly distribution products, it is no longer possible to buy them as new holdings in a NISA at any brokerage.
However, this only applies to new purchases. You can continue to hold what you already have in your NISA tax-free. There is no need to sell in a panic.
JEPI also distributes monthly, so it cannot be held in a NISA.
SCHD cannot be bought directly at Japanese brokerages in the first place. Instead, in the form of investment trusts like Rakuten SCHD or SBI/SCHD, it qualifies for the growth investment quota with quarterly distributions. Of the three, only SCHD can be held in a NISA.
Yardstick 2: The content of the distributions
The distributions from HDV and SCHD are dividends paid by the companies they invest in.
JEPI is different. Its 8.00% yield includes proceeds from selling the right to buy the S&P 500 at a fixed price. If the market stays flat, this is a bonus, but in years when it rises significantly, you give up a portion of those capital gains.
Over the past year, JEPI was +9.32%. It didn’t even reach 60% of VOO’s performance. You could say that 8% of the distribution is money received in exchange for capital gains. It is not a malicious product. It is just different from my goals.
Yardstick 3: Taxes every time you receive a distribution
Distributions from US ETFs are first taxed at 10% in the US. If held in a taxable account, the remainder is taxed at approximately 20% in Japan. Even in a NISA, the 10% US tax is not returned.
If you hold 1 million yen worth for one year, about 3,000 yen is deducted for the SCHD type (3.07% yield) even in a NISA, and about 1,000 yen for the S&P 500 type (1.06%). The deducted amount no longer grows through compound interest.
To be fair, I also hold VOO and QQQ in a taxable account, and the roughly 1% annual dividend is taxed every time. The dividends I receive are partly spent and partly left to accumulate. The difference is a matter of degree. However, a difference of several thousand yen per million yen per year adds up over decades.
One-year wins and losses are not in my yardstick
Looking at it over three years, the rankings are reversed. VOO is first at +81.94%, HDV is +69.07%, and SCHD is +61.59%.
But I won’t say “this proves VOO is right” because if you choose different periods, the rankings can shift either way.
Regarding SCHD, I wrote in May that I wouldn’t buy it for two reasons: “the strategy is different (it barely includes giant IT companies)” and “it lacks upside potential.” This time, I am adding a third reason: during the accumulation phase, it is better to have fewer distributions that are subject to taxes every time they are received.
Even if the one-year performance leans toward SCHD, not one of these three has changed. I do not change my holdings based on things that have not changed.
Will you use those dividends?
It is not that high-dividend ETFs are bad. For those at the stage of living off dividends, the fact that cash comes in without having to sell is valuable in itself.
So if you are unsure, please decide one thing first. If you receive those dividends, will you use them? Or will you reinvest them?
If you will use them, high-dividend ETFs are an option. If you will reinvest them, an index with fewer distributions is sufficient.
If I could tell my 19-year-younger self just one thing, I would say this: Hold what fits your own yardstick, rather than what grew the most last year.
For those who want to know more
I have summarized the comparison table of the three, the diagram of the contents of JEPI distributions, the tax calculation per 1 million yen, and the graphs of 1-year and 3-year performance on my blog.
🎥 HDV, SCHD, JEPI: The reason I don’t buy high-dividend ETFs [October 2026]
#HighDividendETF #SCHD #HDV #NewNISA #note