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Security Comparison

ARCC vs SCHD: Direct BDC Income, or a Dividend Equity Screen?

A head-to-head of Ares Capital and Schwab U.S. Dividend Equity covering company versus fund, payout, and cost.

Data updated September 21, 2026

Best for

  • ARCCInvestors who want higher current income (9.77% vs 3.00% for SCHD).
  • SCHDInvestors who want a quality-dividend tilt rather than the whole market.

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Visual comparison

Key metrics

Projected income on $10K

Projections assume the current yield and share price remain constant. Actual results will vary.

Total returns

100% reinvested · ex-date convention. Period returns use this fixed assumption, independent of chart settings.

ARCC has lagged SCHD over the trailing twelve months, posting a 2.60% total return against 28.29%. The lead holds up over 10 years too: SCHD has compounded at 12.94% a year, against 12.40% for ARCC. SCHD has been the steadier holding, though — annualized volatility of 13.2% against 17.8% for ARCC. Figures are total returns: price change plus every distribution reinvested.

Total return and risk statistics by fund. Each row is one fund; each column is one period or statistic.
SymbolYTD1Y3Y5Y10YSince Oct 2011Volatility Sharpe Sortino Max drawdown
ARCC2.69%2.60%10.54%9.75%12.40%12.12%17.8%0.310.44-19.3%
SCHD23.60%28.29%16.16%10.17%12.94%13.32%13.2%0.801.17-16.1%

Total return with all distributions reinvested on the ex-dividend date (a modeling convention, not the cash-settlement date), split-adjusted, as of September 21, 2026. YTD and 1Y are cumulative; windows of one year or longer are annualized. “Since Oct 2011” measures every fund from October 20, 2011 — the start of shared available history — so all funds share one comparison window. Volatility is the annualized standard deviation of daily total returns over the trailing 3 years. Sharpe and Sortino divide the annualized return in excess of the risk-free rate by, respectively, that volatility and the downside deviation (both over the trailing 3 years) — higher is better. Max drawdown is the largest peak-to-trough total-return decline over the same window — shallower is better.

Side-by-side snapshot

Side-by-side snapshot. Each row is one metric; each column is one fund.
MetricARCCSCHD
Full nameAres Capital CorporationSchwab U.S. Dividend Equity ETF
IssuerAres ManagementSchwab
Last Close$19.44 as of September 21, 2026$33.72 as of September 21, 2026
Distribution rate9.77%3.00%
Distribution Safety Score™ 94100
Safety-Adjusted Yield 9.18%3.00%
Expense ratio—0.06%
AUM—$110B
Distribution frequencyQuarterlyQuarterly
Underlying index—Dow Jones U.S. Dividend 100 Index
Objective—Seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100 Index, which measures the performance of high dividend yielding stocks issued by U.S. companies with a record of consistently paying dividends, selected for fundamental strength relative to their peers based on financial ratios.
Asset classEquityEquity
Inception dateN/A10/20/2011
Beta0.6270.56
Last dividend$0.48 declared, pays 09/30/2026$0.2525
Ex-dividend date09/15/202606/24/2026

Bottom lineChoose ARCC if you want higher current income (9.77% vs 3.00% for SCHD). Choose SCHD if you want a quality-dividend tilt rather than the whole market.

A BDC versus a dividend equity ETF

ARCC is a listed business development company. SCHD is a quality dividend equity fund. Structure is the live difference.

ARCCSCHD
StructureBusiness development companyDividend equity ETF
Expense ratio—0.06%
Distribution rate9.77%3.00%
Fund size—$110B
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Schwab
ETFs33
Total AUM$610B

ETFs and AUM reflect what Dividend Vision tracks — the issuer's full lineup may be larger.

Schwab is a major provider of low-cost, broad-based ETFs known for making investing accessible to individual investors through its discount brokerage platform. The issuer's fund lineup spans multiple categories including core index funds, dividend and income-focused strategies, factor-based approaches, international exposure, fixed income, and digital assets, with popular core holdings like SCHB (U.S. broad market) and SCHD (dividend appreciation) alongside more specialized thematic offerings. Schwab's ETF suite is characterized by its breadth across asset classes and investment styles, competitive expense ratios, and integration with its retail brokerage ecosystem.

See our curated list of related YouTube videos on SCHD.

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Quick verdict

ARCC (Ares Capital Corporation) is a business development company, while SCHD (Schwab U.S. Dividend Equity ETF) is an ETF — their trading structures differ.

ARCC offers the higher yield at 9.77% vs 3.00% for SCHD. A higher yield means more current income per dollar invested, though it may come with different risk characteristics.

Deep dive

Yield & income

On a $10,000 investment, ARCC would generate roughly $81.42/month, while SCHD would produce $25.00/month, at current distribution rates. Both pay quarterly distributions.

ARCC yield9.77%
SCHD yield3.00%
Monthly diff on $10K$56.42

Cost & efficiency

SCHD charges a 0.06% expense ratio — roughly $60 over 10 years on $10,000 (simplified, not compounded). ARCC is a business development company, not a fund, so it charges no expense ratio.

SCHD ER0.06%

Strategy & risk

ARCC is a business development company built around BDC exposure, while SCHD tracks Dow Jones U.S. Dividend 100 Index. Beta is 0.627 for ARCC and 0.56 for SCHD, making SCHD the less volatile of the two by this measure.

ARCC beta0.627
SCHD beta0.56

Security details

ARCC (Ares Capital Corporation) is a business development company. SCHD is managed by Schwab (launched 10/20/2011) with $110B in assets.

SCHD AUM$110B
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Frequently asked questions

What is the difference between ARCC and SCHD?

ARCC (Ares Capital Corporation) is a business development company that lends to middle-market firms. SCHD (Schwab U.S. Dividend Equity ETF) is an ETF of quality dividend stocks. One is a company; the other is a fund. Cost is — versus 0.06%. Distributions are 9.77% and 3.00% as of September 2026. Structure, not headline yield, is the live difference.

What is the current distribution rate for ARCC and SCHD?

ARCC currently distributes 9.77% and SCHD 3.00%, based on fund data updated September 2026. Distribution rate moves with both the payout and the share price, so check the as-of date before relying on either figure.

Is ARCC or SCHD better for dividend income?

It depends on your goals. ARCC currently offers the higher distribution yield, which means more income per dollar invested. However, a lower-yield fund may offer better total return or lower volatility. Consider your time horizon and risk tolerance.

Can I hold both ARCC and SCHD?

Yes — nothing prevents holding both. Whether the combination actually diversifies depends on how much the underlying exposures overlap, which isn't fully measurable from the data on this page; review each security's holdings, sector, and strategy before treating them as complementary.

Is ARCC or SCHD safer?

By Dividend Vision's Distribution Safety Score — a rules-based 0–100 estimate of how resilient a distribution looks, where higher is safer — SCHD scores 100, ARCC scores 94, so SCHD's payout currently looks the more resilient of the two. No score makes an investment risk-free — treat this as a screening signal, not a guarantee.

Which has lower fees, ARCC or SCHD?

SCHD charges a 0.06% expense ratio. ARCC is a business development company, not a fund, so it has no expense ratio — owning it directly costs nothing in ongoing fund fees.

How much income does $10,000 in ARCC vs SCHD generate?

At current rates, $10,000 in ARCC would generate roughly $81.42 per month ($977.00 annually). The same in SCHD would produce about $25.00 per month ($300.00 annually).

Which has performed better historically, ARCC or SCHD?

ARCC has lagged SCHD over the trailing twelve months, posting a 2.60% total return against 28.29%. The lead holds up over 10 years too: SCHD has compounded at 12.94% a year, against 12.40% for ARCC. SCHD has been the steadier holding, though — annualized volatility of 13.2% against 17.8% for ARCC. Figures are total returns: price change plus every distribution reinvested. Past performance does not guarantee future results.

More comparisons to explore

ARCC vs SCHD — at a glance

Generated September 19, 2026.

Overview

ARCC is a business development company that lends to and invests in middle-market private companies, generating income through interest and fees. SCHD is an ETF tracking the Dow Jones U.S. Dividend 100 Index, which holds large-cap U.S. stocks with strong dividend histories and financial strength. The core distinction: ARCC sources income from illiquid debt and equity stakes in private companies, while SCHD derives its yield from publicly traded dividend stocks selected by valuation metrics.

How they differ

ARCC targets a 9.77% distribution rate versus SCHD's 3.00%, a gap driven by their fundamentally different asset bases. ARCC invests in illiquid debt and equity positions in middle-market private firms, where borrowers have limited access to public capital markets; SCHD holds a diversified basket of 100 large-cap public companies screened for dividend consistency and financial health. ARCC distributes quarterly; SCHD does as well. ARCC trades at $19.44 with a beta of 0.627, suggesting lower volatility relative to the broad market; SCHD trades at $33.72 with a beta of 0.56, also below-market correlation but slightly higher.

Who each is best for

ARCC: Fits investors seeking high current income and willing to accept illiquidity, credit risk on private-company loans, and potential NAV volatility in exchange for yields substantially above public-equity alternatives.

SCHD: Designed for investors seeking modest, steady dividend income from a diversified portfolio of established large-cap companies, with daily liquidity and lower fees as primary benefits.

Key risks to know

  • NAV erosion potential: ARCC's 9.77% yield may exceed underlying portfolio growth in weak credit cycles, requiring return-of-capital distributions and slow NAV deterioration over time.
  • Illiquidity and credit concentration: ARCC's portfolio consists of illiquid loans to private middle-market companies. Recession or rising interest rates can impair borrowers' ability to refinance or repay, concentrating downside risk in a smaller number of credits relative to SCHD's 100-stock basket.
  • Dividend sustainability for SCHD: While SCHD's 3.00% is modest and drawn from established dividend payers, economic recession or sector rotation away from dividend stocks could reduce both the yield and capital appreciation potential.
  • Interest-rate sensitivity: ARCC's debt portfolio faces refinancing pressure and lower valuations if rates remain elevated; SCHD's large-cap value stocks are inversely sensitive to rate hikes but benefit from eventual normalization.

Bottom line

If you prioritize maximum current income and can tolerate illiquidity and credit risk, ARCC's 9.77% yield is substantially higher. Past performance does not guarantee future results, and yield sustainability differs markedly between illiquid private credit and liquid public equities.

AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.

Learn the method

The metrics behind this comparison, explained in the Academy.

How to read a fund's stats How distribution coverage is calculated Why total return beats chasing yield

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