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Security Comparison

ARCC vs SCHD: Which Is the Better Pick in 2026?

A head-to-head comparison of Ares Capital Corporation and Schwab U.S. Dividend Equity ETF covering yield, cost, risk, and income potential.

Data updated August 14, 2026

Best for

  • ARCCInvestors who want higher current income (9.66% vs 2.93% for SCHD).
  • SCHDInvestors who want a quality-dividend tilt rather than the whole market.

Jump to the side-by-side numbers

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$19.87 as of August 14, 2026$34.52 as of August 14, 2026
Distribution yield9.66%2.93%
Distribution Safety Score™ 94100
Expense ratio—0.06%
AUM—$106B
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
Beta0.620.56
Last dividend$0.4800$0.2525
Ex-dividend date09/15/202606/24/2026

Bottom lineChoose ARCC if you want higher current income (9.66% vs 2.93% for SCHD). Choose SCHD if you want a quality-dividend tilt rather than the whole market.

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Schwab
ETFs34
Total AUM$605B

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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Visual comparison

Key metrics

Projected income on $10K

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

Total returns

ARCC has lagged SCHD over the trailing twelve months, posting a -3.49% total return against 30.33%. The lead holds up over 10 years too: SCHD has compounded at 12.94% a year, against 12.73% for ARCC. SCHD has been the steadier holding, though — annualized volatility of 13.2% against 17.7% 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
ARCC2.42%-3.49%10.47%9.46%12.73%12.19%17.7%0.310.43-19.3%
SCHD26.54%30.33%15.81%9.72%12.94%13.60%13.2%0.781.13-16.1%

Total return with all distributions reinvested on the ex-dividend date, split-adjusted, as of August 14, 2026. YTD and 1Y are cumulative; longer windows are annualized. “Since Oct 2011” measures every fund from October 20, 2011 — the youngest fund's first trading day — 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.

Quick verdict

ARCC (Ares Capital Corporation) is a business development company, while SCHD (Schwab U.S. Dividend Equity ETF) is an ETF — they take fundamentally different approaches.

ARCC offers the higher yield at 9.66% vs 2.93% 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 $80.50/month, while SCHD would produce $24.42/month, at current distribution rates. Both pay quarterly distributions.

ARCC yield9.66%
SCHD yield2.93%
Monthly diff on $10K$56.08

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, while SCHD tracks Dow Jones U.S. Dividend 100 Index. Beta is 0.62 for ARCC and 0.56 for SCHD, indicating SCHD is less volatile relative to the market.

ARCC beta0.62
SCHD beta0.56

Security details

ARCC (Ares Capital Corporation) is a business development company. SCHD is managed by Schwab (launched 10/20/2011) with $106B in assets.

SCHD AUM$106B
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Frequently asked questions

What is the current distribution yield for ARCC and SCHD?

ARCC currently distributes 9.66% and SCHD 2.93%, based on fund data updated August 2026. Distribution yield 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.

What is the difference between ARCC and SCHD?

ARCC (Ares Capital Corporation) is a business development company, while SCHD (Schwab U.S. Dividend Equity ETF) tracks Dow Jones U.S. Dividend 100 Index. They are issued by Ares Management and Schwab respectively.

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 $80.50 per month ($966.00 annually). The same in SCHD would produce about $24.42 per month ($293.00 annually).

Which has performed better historically, ARCC or SCHD?

ARCC has lagged SCHD over the trailing twelve months, posting a -3.49% total return against 30.33%. The lead holds up over 10 years too: SCHD has compounded at 12.94% a year, against 12.73% for ARCC. SCHD has been the steadier holding, though — annualized volatility of 13.2% against 17.7% 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 August 15, 2026.

Overview

ARCC is a business development company that lends to mid-market private companies, while SCHD is a large-cap dividend ETF tracking 100 of the highest-yielding U.S. stocks with consistent payout histories. The two differ fundamentally in structure (closed-end lending vehicle versus open-end equity fund), underlying exposure (portfolio of corporate loans versus public equities), and yield generation (interest income from debt versus stock dividends). ARCC distributes 9.66% annually; SCHD yields 2.93%.

How they differ

The core difference is structural and strategic. ARCC lends directly to mid-market private companies and retains the interest income as distributions; SCHD holds a diversified basket of 100 large-cap public stocks screened for dividend strength and consistency. This means ARCC's returns depend on its loan origination, underwriting, and credit quality in the private lending market, while SCHD's returns track an index of established public-company dividend payers.

Second, ARCC's yield is roughly 3.3 times higher than SCHD's—9.66% versus 2.93%—but comes with credit risk and illiquidity risk in its underlying loan portfolio. SCHD's lower yield reflects the dividend yields of its index constituents and comes with the transparency and liquidity of public equities.

Third, SCHD's expense ratio is 0.06% and AUM is $106B, making it a low-cost core holding; ARCC, as a BDC, typically carries higher internal costs and management fees baked into its distribution calculation. ARCC has a beta of 0.62 and SCHD a beta of 0.56, suggesting both have lower volatility than the broader market, but ARCC's loan-driven business model adds leverage and credit-cycle sensitivity that beta alone does not capture.

Who each is best for

ARCC: Fits investors seeking higher current income from a diversified private lending portfolio and willing to accept credit risk, illiquidity in the underlying portfolio, and potential NAV volatility tied to interest-rate and economic cycles.

SCHD: Fits investors building a diversified equity core position and valuing simplicity, low costs, and a predictable dividend stream from proven public-company dividend payers, with minimal attention required.

Key risks to know

  • Credit and default risk in private lending: ARCC's returns depend on the performance of mid-market borrowers and loan-loss severity. Economic downturns can trigger covenant breaches, refinancing stress, or defaults that reduce net investment income and pressure distributions.
  • NAV erosion at the 9.66% distribution rate: ARCC's yield significantly exceeds typical private-lending market returns. Sustaining distributions at this level may require return-of-capital treatment, which erodes book value over time if underlying portfolio returns do not keep pace.
  • Interest-rate and leverage sensitivity: BDCs typically employ leverage to amplify returns. Rising rates increase both ARCC's funding costs and the market discount applied to its loan assets, while falling rates can ease refinancing but reduce new-loan yields.
  • Concentration and maturity mismanagement in SCHD: Though SCHD tracks an index, its 100-stock portfolio concentrates in the highest-yielding names. These may skew toward defensive or lower-growth sectors, and dividend cuts by index constituents can reduce yields with limited diversification buffer.
  • Liquidity mismatch: ARCC holds illiquid private loans but trades daily as a closed-end fund. Wide bid-ask spreads and NAV discounts/premiums are common, particularly during credit stress.

Bottom line

ARCC offers substantially higher income at the cost of credit risk, leverage, and NAV volatility tied to private lending cycles; SCHD provides lower but stable dividend income from a large, liquid basket of public equities with minimal fees. If you want to maximize current distributions and can tolerate loan-portfolio risk and illiquidity, ARCC's income is compelling; if you prioritize simplicity, transparency, and broad equity diversification, SCHD's low-cost index exposure fits a different investor profile. Past performance does not guarantee future results.

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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