Sometimes dividend investors get so caught up in dividend yields that they fail to see the big picture. Often the mistake involves taking on more company-specific risk than expected, but sometimes the problem is more subtle. The risk of a lower total return is what investors need to consider when comparing SPDR Portfolio S 500 High Dividend ETF (NYSEMKT: SPYD), which has a yield of 4.6%, to Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) and its 3.5% yield.

From a big-picture perspective, investors buying broad-based exchange-traded funds (ETFs) like SPDR Portfolio S 500 High Dividend ETF and Schwab U.S. Dividend Equity ETF are looking for simplification. In this case, instead of trying to build a portfolio of Dividend-paying stocks one at a time, you can simply buy a single investment that provides you with a prebuilt portfolio. That's great, but you need to understand what you're buying, and that can require a little bit of work.

SPDR Portfolio S 500 High Dividend ETF, for example, isn't just an S 500 index clone, which should be clear from the name. It is focused on the highest-yielding stocks in the S&P 500. But how does it actually go about creating that portfolio? Keeping things simple, it lines up the components of the index according to yield and pulls out the 80 highest-yielding stocks to populate its ETF. The index is equal-weighted.

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Source Fool.com