Wealthy PotBND vs SCHD: A Bond Fund and a Dividend Stock Fund Do Different Jobs
BND and SCHD are not substitutes. BND owns about 11,400 investment-grade U.S. bonds. SCHD owns about 100 U.S. dividend-paying stocks. They share no holdings, they react to different things, and in most portfolios that hold both they do different jobs: SCHD is there to grow, BND is there to cushion. On 1 October 2026 BND actually had the higher 30-day SEC yield (5.07% against 3.37%), which is part of why people compare them.
Table of Contents
The Short Answer
- Different asset classes. BND tracks the Bloomberg U.S. Aggregate Float Adjusted Index of taxable investment-grade bonds. SCHD tracks the Dow Jones U.S. Dividend 100 Index of stocks.
- Overlap: 0%. No holding in common, by our calculation from the funds' SEC holdings filings.
- Yield on 1 October 2026: BND 5.07%, SCHD 3.37% (30-day SEC yields, same date). BND's yield comes from bond interest; SCHD's from company dividends.
- Growth: SCHD by a wide margin. Ten years to 30 June 2026, SCHD returned 12.37% a year at NAV and BND 1.53%.
- 2022: both fell. BND returned -13.15%, SCHD -3.23%. Rising rates hit bonds harder that year.
- But in early 2020 they moved apart. SCHD's worst quarter was -21.55% (first quarter of 2020). BND gained 3.33% in that same quarter.
- Fees: BND 0.03%, SCHD 0.06%. Both are cheap.
Overlap: 0%, Bonds vs Stocks
Our Portfolio Overlap Checker finds no holding in common between BND's filing for 30 June 2026 and SCHD's for 31 May 2026. BND was 99.0% debt and SCHD 99.8% stocks. The checker matches corporate bonds by issuer, so a company whose stock SCHD owns and whose bonds BND owns would show up as overlap; none did at the level the tool reports.
So owning both does not double anything up. The question is not "which is better" but how much of each you want.
BND vs SCHD Side by Side
| BND | SCHD | |
|---|---|---|
| Full name | Vanguard Total Bond Market ETF | Schwab U.S. Dividend Equity ETF |
| What it holds | Investment-grade U.S. bonds: Treasuries, corporates, mortgage-backed | 100 U.S. dividend stocks |
| Expense ratio | 0.03% | 0.06% |
| Prospectus cost of $10,000 over 10 years | $39 | $77 |
| Holdings | 11,421 bonds (31 Aug 2026) | 102 lines (2 Oct 2026) |
| 30-day SEC yield, 1 Oct 2026 | 5.07% | 3.37% |
| Interest-rate sensitivity | Average duration 5.7 years (31 Aug 2026) | Not a bond fund; no duration |
| Best quarter (prospectus) | 6.67% (Q4 2023) | 17.11% (Q4 2020) |
| Worst quarter (prospectus) | -5.94% (Q1 2022) | -21.55% (Q1 2020) |
| Distribution type | Bond interest | Dividends (all qualified in FY2025) |
Vanguard describes BND as "broad exposure to the taxable investment-grade U.S. dollar-denominated bond market, excluding inflation-protected and tax-exempt bonds." About 48% of the fund was U.S. Treasuries in its June 2026 holdings report, with the rest mostly corporate bonds and agency mortgage-backed securities.
SCHD screens for stocks with "at least 10 consecutive years of dividend payments," then ranks them on "cash flow to total debt, return on equity, dividend yield and 5-year dividend growth rate," according to Schwab's prospectus. It caps any stock at 4% and any sector at 25% at each rebalance. Its largest sectors on 30 June 2026 were health care (20.72%), consumer staples (20.38%) and energy (14.07%).
Why BND Yields More Today
On the same date, 1 October 2026, BND's 30-day SEC yield was 5.07% and SCHD's was 3.37%. On $100,000 that is roughly $5,070 against $3,370 a year of income, if the yields held (our arithmetic, not a forecast).
The two numbers mean different things. BND's yield is set by interest rates on the bonds it holds. It is close to what the fund will earn if rates stay where they are, but the bonds' prices still move when rates move. SCHD's yield is set by company dividends divided by the share price. Companies can raise or cut dividends, and the stock price can swing far more than a bond fund's.
So a higher yield on BND is not a reason to swap a dividend stock fund for it, and a growing dividend on SCHD is not a reason to treat it as a bond. Income is one part of total return; the price change is the other.
Returns: 2022 and the Rest
| Calendar year, NAV | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|---|
| BND | -0.04% | 8.71% | 7.71% | -1.66% | -13.15% | 5.70% | 1.34% |
| SCHD | -5.46% | 27.28% | 15.11% | 29.78% | -3.23% | 4.58% | 11.60% |
2022 was the unusual year. Interest rates rose fast, and BND's price return was -15.20%, offset only partly by 2.06% of income, per Vanguard. SCHD held up far better than the broad market: the S&P 500 fund SPYM returned -18.13% that year, per its prospectus. In a more typical stock sell-off the order flips: in the first quarter of 2020, SCHD fell 21.55% while BND gained 3.33%. The year 2018 shows the same pattern on a smaller scale.
| Average annual return at NAV, to 30 June 2026 | 1 year | 3 years | 5 years | 10 years |
|---|---|---|---|---|
| BND | 3.70% | 4.15% | 0.07% | 1.53% |
| SCHD | 24.08% | 13.52% | 8.51% | 12.37% |
BND's five-year return to mid-2026 is close to zero because the window includes 2022. Vanguard's figures to 30 September 2026 show BND at -1.82% over one year after a -3.43% third quarter, a reminder that bond prices can fall in any year rates rise. Compounding the calendar returns from 2016 through 2024, $10,000 grew to about $11,381 in BND and $28,530 in SCHD.
Dollar figures are hypothetical arithmetic by Wealthy Pot from published calendar-year NAV returns, with no contributions, costs or taxes. They are backward-looking, not a forecast. This is educational information, not personalized investment advice.
Taxes: Interest vs Qualified Dividends
The income is taxed differently in a taxable account.
- SCHD: In its fiscal year to 31 August 2025, SCHD reported qualified dividend income of $2,469,946,295, equal to its total distributions for the year (our comparison of the two figures in Schwab's annual report). IRS Publication 550 says qualified dividends get the same 0%, 15% or 20% maximum rates as long-term capital gains.
- BND: Bond interest is taxed as ordinary income federally. Interest on U.S. Treasuries is exempt from state and local income tax, but only part of BND's income comes from Treasuries (about 48% of its holdings in June 2026), so only that part may qualify; check your fund's year-end tax information.
Vanguard's own after-tax figures make the point. To 30 September 2026, BND's ten-year return was 1.13% a year before taxes and -0.07% after taxes on distributions, at the highest federal rates. Inside an IRA or 401(k), none of this applies.
Which One, or Both?
If you need money within a few years, a stock fund like SCHD can be down 20% when you need it, as early 2020 showed. A bond fund like BND has historically moved far less, though 2022 proved it can still lose double digits. For cash you need very soon, a Treasury bill fund is the steadier option; see BND vs SGOV and SCHD vs SGOV.
If you are investing for decades, SCHD (or a broad stock index; see SCHD vs VOO) is the growth engine, and the gap in the ten-year numbers above shows why.
Holding both is the classic stock-and-bond mix, and with 0% overlap nothing is duplicated. How much of each depends on your time horizon and how much of a drop you could live with. That split is a personal decision; a fee-only adviser can help if you are unsure.
If you hold both in different accounts, the tax section above is the reason many investors keep bond interest in tax-deferred accounts and qualified dividends in taxable ones. Whether that suits you depends on your own accounts and tax bracket.
Sources & Methodology
- BND summary prospectus (Form 497K) dated 28 April 2026: 0.03% fee, cost example, index, calendar-year returns and best and worst quarters.
- Vanguard BND fact sheet as of 30 June 2026 and Vanguard's BND data (read 5 October 2026): SEC yield, duration, bond count, quarterly and after-tax returns.
- Schwab Strategic Trust Form 485BPOS filed 22 December 2025: SCHD's 0.06% fee, index rules, calendar-year returns and best and worst quarters.
- Schwab SCHD page, read 5 October 2026: SEC yield, holdings, sectors and returns to 30 June 2026.
- Schwab Strategic Trust annual report (Form N-CSR), year to 31 August 2025: SCHD's qualified dividend income and total distributions.
- IRS Publication 550: qualified dividend rates and the state-tax treatment of Treasury interest.
- Form N-PORT filings for BND (30 June 2026) and SCHD (31 May 2026): the 0% overlap and BND's Treasury share.
Limits. SCHD's 2025 calendar return is not yet in a Schwab filing, so the calendar table stops at 2024. Schwab had not posted 30 September 2026 returns when we checked, so the trailing table uses 30 June 2026 for both funds.
This article is for general education and is not investment, tax or legal advice. Fund data changes daily, index returns cannot be invested in directly, and past performance does not guarantee future results. All investing carries the risk of loss. Figures were checked against the sources above on 5 October 2026.
FAQ: BND vs SCHD
Is BND or SCHD better?
They do different things. SCHD is a stock fund that has grown much faster (12.37% a year over ten years to 30 June 2026, against 1.53% for BND). BND is a bond fund that has usually fallen less in stock market sell-offs.
Which pays more income, BND or SCHD?
On 1 October 2026, BND's 30-day SEC yield was 5.07% and SCHD's was 3.37%. SCHD's dividends get qualified-dividend tax rates; BND's interest is taxed as ordinary income.
Can SCHD replace bonds?
Not reliably. SCHD fell 21.55% in the first quarter of 2020, when BND gained 3.33%. A dividend stock fund is still a stock fund.
Why did BND lose money in 2022?
Interest rates rose sharply, and bond prices fall when rates rise. BND's price return that year was -15.20%, and its total return -13.15% after interest.
Do BND and SCHD overlap?
No. Our overlap checker finds 0% overlap and no shared holdings between BND's 30 June 2026 filing and SCHD's 31 May 2026 filing.
Should I hold both BND and SCHD?
Many investors hold a stock fund and a bond fund together. With no overlap, the two do not duplicate each other. The right mix depends on your time horizon and risk tolerance.
Cite This Page
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"BND vs SCHD: A Bond Fund and a Dividend Stock Fund Do Different Jobs." Wealthy Pot, 2026. https://wealthypot.com/bnd-vs-schd/
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