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)