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NEW YORK (Fabian Capital Management) -- Recently I had a conversation with a client that related to implementing dividend ETFs in her portfolio. She is an avid reader of investment content and came across a unique fund that has several alluring qualities for income-oriented investors.

The ALPS Sector Dividend Dogs ETF (SDOG) - Get Free Report is one investment that I had heard of, but never fully researched until she brought it to my attention. This ETF was introduced just over two years ago and has since amassed over $800 million in total assets. With that quick success, the fund must have a unique strategy or compelling value proposition that makes it stand out above similar offerings in the category.

Sure enough, this ETF takes a unique approach by selecting five holdings from each of the ten sectors within the S&P 500 Index with the highest dividend yields. Each holding is then equal weighted so that every company has a similar pull on the total return of the fund. The end result is a portfolio of 50 large-cap stocks that includes a high degree of diversification among every S&P sector.

Often times dividend funds are skewed towards specific area of the market such as utilities, consumer staples, or energy companies. However, ALPS Sector Dividend Dogs ETF is provides you with the opportunity to own equal segments of the economy in one single package. In addition, because they select from some of the largest and most liquid stocks in the world, the holdings are generally high quality companies. This includes well-known dividend payers such as: Intel (INTC) - Get Free Report , Lorillard (LO) , and AT&T (T) - Get Free Report .

SDOG has a current 30-day SEC yield of 3.32%, which slightly exceeds the 3.15% yield of the category benchmark iShares Select Dividend ETF (DVY) - Get Free Report . In addition, both funds share a similar expense ratio of 0.40%.

Over the last year, ALPS Sector Dividend Dogs ETF has actually outperformed iShares Select Dividend ETF and the SPDR S&P Dividend ETF (SDY) - Get Free Report by a fair margin. This ETF has returned nearly 25% over the last 52-weeks with dividends factored back in.

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This outperformance in ALPS Sector Dividend Dogs ETF is likely due to larger exposure to technology, health care and telecommunications sectors, which have performed strongly over that time frame. iShares Select Dividend ETF is overly weighted towards utilities, while SPDR S&P Dividend ETF has significant exposure to the weakened financial arena.

The one drawback to this strategy that I find less appealing is that dividends are paid on a quarterly basis. I typically prefer equity income funds that offer monthly dividends to smooth out the payment stream and allow for greater frequency of distributions. One competitor I recently profiled that does offer monthly income is the Global X Super Dividend U.S. ETF (DIV) - Get Free Report .

Nevertheless, ALPS Sector Dividend Dogs ETF should certainly be on your watch list of dividend paying ETFs that include a reasonable expense ratio, higher than average yield, and unique index construction methodology. This fund can certainly be used as a core holding within the context of a conservative income portfolio to gain market correlation and yield.

The original Dogs of the Dow Theory focuses on selecting 10 of the highest dividend paying stocks in the Dow Jones Industrial Average on an annual basis. ALPS Sector Dividend Dogs ETF does an admirable job of taking that one step farther to include a more diversified and balanced subset of companies.

At the time of publication, the author held no positions in any of the stocks mentioned.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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