When Does QYLD Actually Beat SCHD? We Tested Every Year Since 2014
When Does QYLD Actually Beat SCHD? We Tested Every Year Since 2014
We've published several analyses showing that high-yield covered call funds underperform dividend growth funds over long periods. That conclusion is well-supported — but it invites an obvious challenge: surely there are conditions where the high-yield structure wins. Covered call proponents point to down markets and flat markets. That's the standard defense.
So we tested it properly. Twelve years, head to head, every single year scored. QYLD won five of them.
But the years it won are not the years the conventional argument predicts — and the single clearest test of the "downside protection" thesis produced the opposite of what that thesis claims.
The Year-by-Year Scoreboard (2014–2025)
| Year | SCHD Total Return | QYLD Total Return | Outperforming Winner | Performance Margin |
|---|---|---|---|---|
| 2014 | 11.69% | 4.37% | SCHD | -7.32 pts |
| 2015 | -0.31% | 7.17% | QYLD | +7.48 pts |
| 2016 | 16.44% | 4.76% | SCHD | -11.68 pts |
| 2017 | 20.83% | 18.79% | SCHD | -2.04 pts |
| 2018 | -5.56% | -3.05% | QYLD | +2.51 pts |
| 2019 | 27.28% | 22.68% | SCHD | -4.60 pts |
| 2020 | 15.08% | 8.74% | SCHD | -6.34 pts |
| 2021 | 29.87% | 10.42% | SCHD | -19.45 pts |
| 2022 | -3.23% | -19.09% | SCHD | -15.86 pts |
| 2023 | 4.57% | 22.75% | QYLD | +18.18 pts |
| 2024 | 11.67% | 19.33% | QYLD | +7.66 pts |
| 2025 | 4.33% | 11.44% | QYLD | +7.11 pts |
Final tally: SCHD 7 Wins, QYLD 5 Wins.
That's much closer than the ten-year annualized figures suggest — SCHD compounds at 12.04% versus QYLD's 8.38%. The gap comes from SCHD's wins being bigger, not more frequent. Three of SCHD's seven wins exceeded 11 points; QYLD's largest was 18.18.
Explore the market regime dynamics with the interactive analyzer below:
12-Year Head-to-Head Market Regime Explorer
Filter by market condition to see exactly when covered calls (QYLD) dominate and where dividend growth (SCHD) wins.
The Finding That Breaks the Standard Argument
Look at the two genuine bear-market years:
| Year | SCHD Total Return | QYLD Total Return | Head-to-Head Result |
|---|---|---|---|
| 2018 (Sharp Q4 Drop) | -5.56% | -3.05% | QYLD outperformed by +2.51 pts |
| 2022 (Sustained Bear) | -3.23% | -19.09% | QYLD underperformed by -15.86 pts |
Both were down years. The covered call fund won one and got crushed in the other. In 2022 — the year most cited as proof that markets can fall hard — QYLD lost nearly 19% while SCHD lost just 3%.
This is the clearest available refutation of the "covered calls protect the downside" claim. The premium collected simply is not large enough to offset a sustained decline in the underlying index. Covered calls do not provide true downside protection — the options premium received does not cushion a prolonged equity draw-down (as we documented in our 12-year verification of QYLD's NAV erosion).
The reason 2018 and 2022 diverged is what the two declines were made of. 2018's drop was concentrated in a sharp Q4 selloff with elevated volatility (VIX spike), which inflated option premiums and gave QYLD extra cash to cushion the fall. 2022 was a grinding, year-long repricing of tech multiples — QYLD absorbed 100% of the falling Nasdaq-100 for twelve months while its capped-upside mechanism prevented any participation in intra-year counter-trend rallies. QYLD finished 2022 down -19.09% against a broader dividend category average of -3.2%.
Where QYLD Actually Wins: The Range-Bound Regime
Sort the results by SCHD's return and a much cleaner pattern emerges than "down markets":
| Market Condition | QYLD Record | Specific Years |
|---|---|---|
| Sharp decline (below -5%) | 1-0 | 2018 |
| Mild decline (-5% to 0%) | 1-1 | 2015 win (+7.5 pts), 2022 loss (-15.9 pts) |
| Flat / Range-Bound (0% to 5%) | 2-0 (Undefeated) | 2023 (+18.2 pts), 2025 (+7.1 pts) |
| Moderate gain (5% to 15%) | 1-1 | 2024 win (+7.7 pts), 2014 loss (-7.3 pts) |
| Strong gain (above 15%) | 0-5 (0% Win Rate) | 2016, 2017, 2019, 2020, 2021 |
The flat band is where QYLD is completely undefeated. In 2023 (SCHD +4.57%) and 2025 (SCHD +4.33%), QYLD won by 18.18 and 7.11 points respectively. That's not a small edge — it's the largest and most consistent advantage in the entire dataset.
And the strong-gain band is where it never wins. Zero for five, with an average deficit of roughly 8.8 points. When the market rallies, writing at-the-money calls forfeits the entire capital gain above the strike, every single month (compare this to the compounding power shown in our 11-ETF real return scorecard).
The Boundary Line
Across twelve years, the highest SCHD return in a year QYLD won was 11.67% (2024). The lowest SCHD return in a year QYLD lost was -3.23% (2022).
So the operating range is clear: QYLD tends to win when the dividend-growth benchmark returns somewhere between flat and about 12% — with the critical exception that a sustained grinding decline (2022) breaks the pattern entirely.
That's a narrow and specific window. It excludes strong bull years, which have historically been the most frequent regime, and it does not reliably protect capital in bear markets, which is where the strategy is most aggressively marketed.
What This Means Practically
Three key conclusions follow:
- The "downside protection" case is the weakest argument. It rests on a 1-1 record with one of those outcomes being a catastrophic 15.9-point underperformance. If your reason for holding a covered call fund is crash protection, the 2022 data demonstrates that high-yield options funds are not a bond substitute.
- The "sideways market" case is mathematically robust. 2-0 with an average margin over 12.6 points. If you believe the equity market will be range-bound over the next 2–3 years, selling options premium has a genuine edge — you are monetizing upside volatility you wouldn't have captured anyway (see our 12-year allocation study on income vs. growth trade-offs).
- The regime timing dilemma. Nobody knew in January 2023 that dividend stocks would tread water while tech rebounded. The strategy that wins in flat markets loses heavily in strong ones, and strong years compound long-term wealth (as proven in our SCHD real return and purchasing power study).
There is also an implied volatility headwind: QYLD's income depends directly on the VIX. Monthly distributions averaged $0.198 in volatile periods but drop roughly 15–20% during calm bull markets. Low-volatility markets shrink the premium yield, meaning the very environments where the strategy is most stable are also the ones that reduce its cash payout.
What This Analysis Doesn't Cover
- Annual granularity only. Within-year sequences — such as the sharp March 2020 crash followed by a rapid tech recovery — produce intra-year path dependencies that annual figures smooth over.
- Tax drag asymmetry. QYLD distributions are taxed as ordinary income at up to 37%, whereas SCHD distributions receive 15% qualified treatment (see our Asset Location $59k tax study). In a taxable account, QYLD's net victory margins are smaller.
- Alternative call strategies. Out-of-the-money covered call funds (such as JEPI or DIVO) leave partial upside un-capped, behaving differently from QYLD's full at-the-money structure (detailed in our JEPI Roth vs. Taxable breakdown).
The Bottom Line
QYLD beat SCHD in five of twelve years — more often than its long-term underperformance suggests. But the wins cluster strictly in flat markets (2-0, by wide margins), not in bear markets, and the fund's worst relative year by far was 2022, when it lagged SCHD by 15.86 points.
The marketing claim that covered calls protect you when markets fall is the one claim the data most directly disproves. The real edge is narrower: they win when markets go nowhere. That's a legitimate tool for a specific macroeconomic regime, but when the market runs, the cost of giving up growth compounds permanently.