Dividend investing is no longer just about safe, steady payouts. In 2025, the landscape is shifting: traditional stalwarts like SCHD offer stability, but tech-focused ETFs like FDVV are delivering faster growth, higher total returns, and rising dividends. This new era challenges investors to balance yield today with growth tomorrow, showing that innovation can now pay in cash as well as capital gains.

Let’s embark on this transformative journey together and position your portfolio for success in this evolving market landscape!

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You’ve been told for years that dividend investing is simple: pick the safe, steady names, collect your yield, and sleep soundly. For a long time, that formula worked. Funds like the Schwab U.S. Dividend Equity ETF (SCHD) became household names for income investors, promising a blend of reliability and resilience. With over $71 billion in assets, a track record stretching back to 2011, and defensive holdings in staples and energy, SCHD was the blueprint for “safe dividends.”

But 2025 has delivered a reality check. While SCHD has slipped into negative territory this year—down just over 1%—another player, often overlooked, has been rewriting the rules. Enter Fidelity High Dividend ETF (FDVV), the tech-heavy upstart that most investors dismissed until now. FDVV is up more than 11% year-to-date, leaving SCHD in the dust. That’s a performance gap of over 12 percentage points.

For the busy investor with too many tabs open and not enough time to dig through financial reports, the story here isn’t just numbers on a screen. It’s a turning point. What you thought was defensive may no longer defend. What you thought was risky may actually be leading.

The dividend world is splitting in two: tradition versus innovation.

SCHD is everything an old-school income investor could want. A 3.83% yield, a 0.06% expense ratio, and blue-chip holdings like Chevron, Cisco, PepsiCo, ConocoPhillips, and Altria. Companies that have been paying dividends for decades—long before most investors even had a brokerage app.

It’s built on the Dow Jones U.S. Dividend 100 Index, which only allows in companies with at least 10 years of consistent dividends. That’s discipline. That’s stability. That’s why advisors put retirees into it.

But here’s the catch: stability doesn’t mean growth. SCHD’s sector allocations reveal the challenge. With nearly 20% in energy—a sector caught between oil price swings and the global transition to renewables—performance has lagged. Its technology exposure is under 9%, leaving it on the sidelines of the AI-driven boom that’s fueling today’s economy.

For someone who needs income today, SCHD still makes sense. It’s recession-resistant, battle-tested, and has survived market shocks from the COVID crash to Fed rate hikes. But it may no longer be the fund that builds wealth for tomorrow.

FDVV doesn’t care about dividend history—it cares about dividend potential. Its methodology weighs companies not just on yield, but also on payout ratios and dividend growth prospects. That’s why its top holdings look radically different: Nvidia (6.7%), Microsoft (5.9%), Apple (4.8%), Broadcom, and JP Morgan.

This is not your grandfather’s dividend portfolio. It’s a portfolio for the AI era. FDVV has nearly 26% in tech, compared to SCHD’s single-digit slice. And it’s paying off:

Even its dividend growth tells a story. FDVV has averaged nearly 8% annual dividend growth in the past 5 years, powered by companies still in their expansion phase. SCHD’s dividend growth rate is similar, but coming from mature firms nearing their growth limits.

Yes, FDVV is riskier. Its beta of 0.97 and standard deviation of 18.7% mean sharper ups and downs compared to SCHD’s steadier profile. And in a crisis, it could hurt more—FDVV’s worst drawdown was -40%, while SCHD’s was -33%. But here’s the kicker: FDVV’s Sharpe ratio of 1.08 versus SCHD’s 0.29 shows that risk has been handsomely rewarded.

This is the crux: FDVV bets on tomorrow’s aristocrats—companies like Microsoft and Apple—still innovating, still growing, but mature enough to share the spoils.

The trade-off couldn’t be clearer.

But remember, FDVV’s 0.16% expense ratio is nearly triple SCHD’s, and over decades, that adds up. Liquidity also matters—SCHD’s $71B asset base dwarfs FDVV’s $6B.

So what kind of investor are you?

The smarter play may not be picking sides at all. Holding both—balancing stability with growth—could capture the best of both worlds.

This year feels different. Dividend investing isn’t just about clipping coupons anymore. It’s about deciding whether to anchor in the past or align with the future.

SCHD represents the old guard: dependable, conservative, and safe. FDVV represents the new guard: bold, growth-oriented, and forward-looking. The performance gap in 2025 is more than numbers—it’s proof that the dividend landscape has shifted.

Technology companies are no longer just growth plays. They’re dividend machines, funding innovation and rewarding shareholders. Nvidia, Microsoft, Apple—these aren’t speculative bets anymore. They’re cash-rich powerhouses shaping the future.

But cycles always rotate. The next downturn could bring defensive sectors back into favor, rewarding SCHD investors who stayed patient. Or it could cement FDVV’s model as the future of dividend investing.

For the investor who’s juggling work, life, and money—who doesn’t have time to read 20 analyst reports—the real takeaway is simple: dividends are evolving. Ignoring that evolution could cost years of growth. Embracing it, even cautiously, could transform your portfolio.

The choice is yours. Not tomorrow, not next year—today. Because dividend investing, as you knew it, is gone. And 2025 may well be the year remembered as the moment everything changed.

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Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Please consult with a financial advisor before making any investment decisions.