Analysis indicates that despite the Schwab U.S. Dividend Equity ETF (SCHD)'s dividend yield of approximately 3% being lower than the approximately 11% of the NEOS S&P 500 High Income ETF (SPYI) and the JPMorgan ChaseNasdaq Equity Premium Income ETF (JEPQ), SCHD achieved a price return of 31% over the past year, surpassing SPYI's 18% and JEPQ's 21%.

The report explains that covered call ETFs like SPYI and JEPQ generate income by selling options, which causes them to forgo potential upside when the market rises. In contrast, SCHD achieves a dual return of stock price appreciation and dividend growth by investing in companies with a consistent ability to grow dividends. Furthermore, SCHD's qualified dividend income is typically taxed at long-term capital gains rates, while distributions from covered call ETFs are generally taxed at ordinary income rates, which also impacts investors' actual returns.