SCHD vs. JEPI: The Ultimate Dividend Strategy Showdown
SCHD vs. JEPI: The Ultimate Dividend Strategy Showdown
By Team BMT โข
๐ก EXECUTIVE SUMMARY
- Strategy Clash: SCHD focuses on Dividend Growth (Capital Appreciation), while JEPI utilizes Covered Calls for immediate high yield.
- Tax Reality: SCHD pays Qualified Dividends (Low Tax). JEPI pays Ordinary Income (High Tax).
- Verdict: SCHD is for Wealth Accumulators (Under 55). JEPI is for Income Spenders (Retirees needing cash flow).
โ ๏ธ THE “TAX DRAG” WARNING
Holding JEPI in a Taxable Brokerage Account is mathematically inefficient. Its distributions are taxed at your marginal income rate (up to 37% + State). Always shelter JEPI in an IRA or 401(k). SCHD is safe for taxable accounts.
Tax Bill on $10,000 Income
SCHD (Qualified Rate 15% + NIIT)
$1,880 Tax
Efficient
JEPI (Ordinary Rate 37% + NIIT)
$4,080 Tax
Heavy Drag
Head-to-Head Protocol
| Feature | SCHD (Growth) | JEPI (Income) |
|---|---|---|
| Yield Source | Corporate Profits | Option Premiums |
| Market Cond. | Bull Markets | Flat/Bear Markets |
| Ideal Account | Taxable / Roth | IRA Only |
“Do not chase yield into a tax trap. Use SCHD to build the mountain, and JEPI to harvest it when you reach the summit.”