OUSM vs SCHD

OUSMCALPS O'Shares U.S. Small-Cap Quality Dividend ETF

SCHDASchwab U.S. Dividend Equity ETF

In short

OUSM Most dividend ETFs shop the large-cap aisle. OUSM works the small-cap end instead, screening for quality balance sheets, lower volatility and dividend growth, then paying out monthly.

SCHD The dividend fund that checks the balance sheet before it checks the yield. SCHD only considers companies with 10 straight years of payouts, then ranks the survivors on cash flow, return on equity and dividend growth. Quality gate first, income second, at six basis points.

Stated mandate

OUSM OUSM seeks to track the performance of the O'Shares U.S. Small-Cap Quality Dividend Index before fees and expenses. Its portfolio consists of U.S. small-cap dividend-paying companies selected for quality, low volatility, and dividend-growth characteristics.

SCHD The fund seeks to track, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100TM Index.

Why people hold it

• OUSM Small-cap and dividend rarely share a shelf. The index screens roughly 110 U.S. small caps for quality, low volatility and dividend growth, a corner the big dividend funds mostly skip.alpsfunds.com
• Distributions land monthly rather than quarterly, an uncommon cadence for a stock fund.
• Live since 2016 and still doing the one job on the label: track a small-cap quality dividend index, with no drift up into large caps.

• SCHD Charges 0.06% a year, near the floor for US equity ETFs and a fraction of what the typical dividend-screen fund costs.schwabassetmanagement.com
• The rulebook is strict: 10 consecutive years of dividends to qualify, then a composite rank on cash-flow-to-total-debt, return on equity, yield and five-year dividend growth.spglobal.com
• Index rules cap any single stock at 4.5% and any sector at 25%, so one hot name cannot quietly become the whole income stream.spglobal.com
• Running since 2011 and now among the largest, most heavily traded dividend ETFs, with tracking that stays very close to its index.

Worth knowing

• OUSM 0.48% a year is the toll for the small-cap screen. Large-cap dividend heavyweights in the same group, including SCHD, VIG and DGRO, charge a fraction of that.
• Small caps swing harder than blue chips. The low-volatility screen softens the ride; it does not flatten it.
• Moderately traded rather than a category volume leader, so spreads can run wider than in the giant dividend funds.

• SCHD Roughly 100 names, every one a long-time dividend payer. The fast-growing non-payers that drive much of the US market are not eligible, by design.spglobal.com
• The yield and quality screens tilt it toward mature, cash-generating sectors, so it looks nothing like a total-market fund. Distributions land quarterly, not monthly.spglobal.com
• Not the absolute cheapest shelf item: VIG runs 0.04% and DIVB 0.05%, though both screen for dividends differently.

Full OUSM profile⁠

Full SCHD profile⁠