The ‘Dogs of the Dow’ strategy has proven beneficial for investors over the long term. This is especially true, as the Dogs have beaten the Dow Jones Industrial Average by an average of about 1.3% in 10 of the last 15 years, as per Bespoke Investment Group.

In 2015, the Dogs outperformed the Dow Jones Industrial Average benchmark by a slim margin of 100 bps (excluding dividend income) and are continuing to do so this year even in a tumultuous stock market. In fact, the Dogs of the Dow fell just 4.4% in the first week of 2016 while Dow Jones plunged 6.2% (read: Top & Flop ETFs to Start 2016).

The ‘Dogs of the Dow’ represents the 10 highest yielding blue chip companies of the Dow Jones Industrial Average that are near the bottom of their business cycle and thus have higher dividend yields (due to depressed stock prices). High dividend yields suggest that these stocks are in the oversold territory and will rebound faster than any other stock when the business cycle changes. As such, the strategy combines both the elements of dividend and value investing.

Given this, honing in on the stocks that are cheaper than their peers and are unlikely to cut dividends could generate above-market returns over the one-year period and lead to juicy yields. For 2016, while six of the 2015 Dogs of the Dow – Verizon (VZ), Chevron (CVX), Caterpillar (CAT), Exxon Mobil (XOM), Pfizer (PFE), and Merck (MRK) – remain in the list, International Business Machines (IBM), Procter & Gamble (PG), Wal-Mart (WMT) and Cisco (CSCO) have newly found their way into the group.

However, the performance of the Dow Dogs differs from bull to bear markets and great caution needs to be exercised while investing in these companies. Still, those looking to invest in these stocks could do so in the basket form via ETFs with lower risk. Below, we have highlighted six ETFs with heavy exposure to the Dogs of the Dow that look exciting for 2016 (read: Popular Dividend-Focus ETFs to Buy Now).
 
ELEMENTS DJ High Yield Select 10 ETN (DOD - ETF report)
 
This is an ETN option and provides investors pure play to the 10 highest dividend-yielding securities in Dow Jones Industrial Average in equal proportions. It tracks the Dow Jones High Yield Select 10 Total Return Index and charges 75 bps in annual fees. The note has amassed $35.7 million in its asset base while trades in light volume of around 6,000 shares on average daily basis. DOD shed 4.9% so far this year.
 
ALPS Sector Dividend Dogs ETF (SDOG - ETF report)
 
This fund applies the ‘Dogs of the Dow Theory’ on a sector-by-sector basis using the S&P 500. This could be easily done by selecting the five highest yielding securities in each of the 10 GICS sectors and equally weighing them. These higher yielding stocks will appreciate in order to bring their yields in line with the market, potentially leading to outsized gains. This approach results in a portfolio of 50 stocks with each security accounting for no more than 2.32% of total assets. The fund has accumulated $905.6 million in AUM and trades in good volume of about 155,000 shares. It charges 40 bps in annual fees and was down over 9% in the first few trading sessions of 2016.
 
Guggenheim Dow Jones Industrial Average Dividend ETF (DJD - ETF report)

This is a new ETF in the space having accumulated $2.4 million within its month of debut. The fund offers an alternative, strategic beta approach to the Dow Jones Industrial Average by weighting each security by dividend yield, rather than price. It follows the Dow Jones Industrial Average Yield Weighted index, holding all the 30 Dow stocks in its basket. Each of the securities holds less than 6.5%. The product charges 30 bps in annual fees from investors and trades in a paltry volume of 2,000 shares a day on average. It has lost 7.5% so far this year (read: New Dow-Based Dividend ETF for Yield-Hungry Investors).  
 
iShares High Dividend ETF (HDV - ETF report)
 
This product provides exposure to 75 dividend stocks by tracking the Morningstar Dividend Yield Focus Index. The seven Dogs of the Dow account for 45% of the portfolio, suggesting that these Dogs dominate the returns of the fund. HDV is among the largest and most popular ETF in the large cap space with AUM of about $4.1 billion and average trading volume of around 354,000 shares. It charges 12 bps in fees per year and has lost 4.3% in the year-to-date timeframe.
 
Schwab U.S. Dividend Equity ETF (SCHD - ETF report)
 
This product offers exposure to the 107 high dividend yielding U.S. companies that have a record of consistent dividend payments. This can be easily done by tracking the Dow Jones U.S. Dividend 100 Index. The eight Dogs of the Dow combine to make up for 28.6% share in the basket. The fund has amassed over $2.9 billion in its asset base and trades in solid volume of 617,000 shares a day. It is one of the low cost choices in the dividend space, charging 7 bps in fees per year. The ETF shed about 6% so far (read: Why Invest in Dividend Aristocrat ETFs Now?).
 
First Trust Morningstar Dividend Leaders Index Fund (FDL - ETF report)

With AUM of $860.1 million, the fund follows the Morningstar Dividend Leaders Index. In total, it holds 97 stocks that have shown dividend consistency and dividend sustainability with five Dogs of the Dow accounting for a combined 30% of assets. Volume is good as it exchanges nearly 194,000 shares a day on average while expense ratio comes in at 0.45%. The fund has lost 3.7% so far in 2016.