FDVV’s 2.78% Yield Looks Weak Next to SCHD’s 3.80% Income Stream for Retirees

By Michael Williams Published Dec 19, 9:07AM EST

Quick Read

FDVV allocates 18% to NVIDIA, Apple and Microsoft but these three holdings yield less than 0.5%.
The fund cut dividends 7.7% in 2024 after growing payouts 48% cumulatively from 2020 to 2023.
SCHD offers a 3.80% yield versus FDVV’s 2.78% with more stable distributions.
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FDVV’s 2.78% Yield Looks Weak Next to SCHD’s 3.80% Income Stream for Retirees — © 24/7 Wall St.

Fidelity High Dividend ETF (NYSEARCA:FDVV | FDVV Price Prediction) markets itself as a high-dividend option for income investors, but its 2.78% yield and unusual portfolio composition raise questions about long-term sustainability. The ETF generates income from dividends paid by underlying equity holdings, tracking the Fidelity High Dividend Index of large and mid-cap stocks. With $7.7 billion in assets and a low 0.15% expense ratio, FDVV appears attractive on paper. However, a closer look at its top holdings reveals a fundamental tension between growth and income.

Portfolio Composition Raises Concerns

FDVV’s largest positions are growth-oriented technology stocks that contribute minimal dividend income. NVIDIA (NASDAQ:NVDA), the fund’s largest holding at 6.41%, yields just 0.02% with an annual dividend of $0.04 per share. Despite a 53% profit margin and 67% earnings growth, NVIDIA slashed its quarterly dividend from $0.04 to $0.01 in 2024—a 75% cut that signals the company prioritizes reinvestment over shareholder payouts.

Apple (NASDAQ:AAPL), the second-largest holding at 6.11%, offers a 0.37% yield with a $1.02 annual dividend. While more substantial than NVIDIA, this remains far below income investor expectations. Microsoft (NASDAQ:MSFT) rounds out the tech triumvirate at 5.24% of the portfolio with a 0.72% yield and $3.40 annual dividend.

Together, these three holdings represent nearly 18% of FDVV but collectively yield less than 0.5%.

Traditional Dividend Payers Provide Stability

JPMorgan Chase (NYSE:JPM), representing 2.71% of the portfolio, offers more reliable income with a 1.73% yield and $5.55 annual dividend. The bank’s 16x earnings multiple and 16% return on equity suggest sustainable payouts. Exxon Mobil (NYSE:XOM) at 1.97% of holdings provides a 3.36% yield with a $3.96 annual dividend, though recent quarterly earnings declined 8% year-over-year amid energy price volatility.

The problem is clear: FDVV’s 26.5% allocation to information technology—the largest sector weighting—contradicts its dividend-focused mandate. Meanwhile, traditional income sectors like utilities (9.6%) and energy (8.7%) receive far less emphasis. Dividend payments have also shown concerning volatility, ranging from $0.185 to $0.504 quarterly over the past four years. After growing dividends 48% cumulatively from 2020 to 2023, FDVV experienced its first annual decline in 2024, dropping 7.7%.

An infographic titled 'FDVV Looks Good On Paper, But Is The High Dividend Yield Sustainable?' outlines details for FDVV and SCHD. It includes a section on FDVV's yield (2.78%), expense ratio (0.15% - Low), assets ($7.7 Billion), and goal (high-dividend income). A 'Portfolio Composition Concerns' section compares 'Top Growth Tech Holdings (Low Yield)' like NVIDIA (6.41% weight, 0.02% yield), Apple (6.11% weight, 0.37% yield), and Microsoft (5.24% weight, 0.72% yield), against 'Traditional Dividend Payers' such as JPMorgan Chase (2.71% weight, 1.73% yield) and Exxon Mobil (1.97% weight, 3.36% yield). A bar chart visually compares the yield (blue bars) versus portfolio weight (pink bars) for these top five holdings. Another section details FDVV's 'Fundamental Tension & Volatility,' showing sector allocation with Information Technology as the largest (26.5%) and dividend volatility over 4 years with a 7.7% annual decline in 2024. Finally, it 'Considers SCHD as an Alternative,' detailing SCHD's 3.80% yield, focus on US companies with consistent dividend growth, and stability (dependable cash flow & low expense ratio). The infographic concludes that SCHD offers a more compelling choice for reliable dividends. The date is Wednesday, December 17, 2025. — This infographic evaluates the Fidelity High Dividend ETF (FDVV), highlighting its portfolio’s reliance on low-yield tech stocks and significant dividend volatility. It presents the Schwab US Dividend Equity ETF (SCHD) as a potentially more reliable alternative for income-focused investors.

Consider SCHD as an Alternative

For investors seeking more reliable dividend income, the Schwab US Dividend Equity ETF (NYSEARCA:SCHD) offers a compelling alternative. SCHD yields 3.80%—significantly higher than FDVV’s 2.78%—and focuses exclusively on US companies with consistent dividend growth records. The fund screens for financial strength and dividend sustainability, resulting in a portfolio weighted toward traditional dividend sectors rather than growth tech. SCHD has demonstrated more stable quarterly distributions and maintains a similarly low expense ratio, making it a stronger choice for income-focused investors seeking dependable cash flow.

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About the Author Michael Williams →

I am a long time investor and student of business, and believe finding good companies that can become great investments is the best game on earth. After 20 years of writing and researching the public markets it is clear that individuals have never had more tools and information to take control of their financial lives. From ETFs and $0 commissions to cryptos and prediction markets there has never been a greater democratization of access to investing.

I write to help people understand the investments available to them so they can make the best choice for their portfolio, whether they're starting out or looking for income in retirement.