Stubborn inflation, higher energy costs and a Fed that may still tighten further have pushed many investors toward safer corners of the market. Income focused investors are paying closer attention to U.S. consumer staples stocks that offer dividends and relatively steadier trading patterns, worried about both recession risk and capital preservation. This article looks at three stocks exposed to these cross currents and how they might respond to today’s backdrop.

The three stocks discussed below are only a starting sample, and the full screen surfaced 23 more U.S. consumer staples companies with similarly compelling income and stability stories that are not covered here. To identify, compare and analyze the highest conviction ideas from that broader group, head straight into the Defensive, Dividend-Paying U.S. Consumer Staples Stocks screener.

Reynolds Consumer Products (REYN)

Reynolds Consumer Products is a household goods company behind Reynolds Wrap aluminum foil, Reynolds Kitchens baking products and Hefty trash bags, food storage and tableware that are sold through major retailers and eCommerce. Revenue is concentrated in Reynolds Cooking & Kitchen Essentials at about US$1.3b and Hefty Home & Tableware at about US$826 million, with segment and corporate adjustments affecting reported totals. The company is valued at roughly US$5.5b.

Reynolds Consumer Products stands out in a higher inflation and potential recession setting because shoppers typically keep buying foil, trash bags and food storage, which supports relatively steady demand and the ability to fund its regular dividend. The stock combines this defensive profile with improving profitability and a P/E that sits below many household products peers, which may appeal if you care about valuation support as well as income. The flip side is that earnings are closely tied to volatile aluminum and resin costs and to the bargaining power of large retailers, so pricing and cost control need to keep doing a lot of the heavy lifting.

Reynolds Consumer Products blends everyday essentials with a P/E that sits below many household products peers, which could suggest that the full story on valuation support is not yet fully reflected. Get the DCF valuation analysis for Reynolds Consumer Products

Build your own defensive dividend and value shortlist around Reynolds Consumer Products

Reynolds Consumer Products and the two other stocks in this article all came out of a single screen, but the real value comes when you set your own rules. Use our customisable Screener to mix filters like dividends, valuation, balance sheet strength and risks to suit your style, or start with any of our curated Investing Ideas.

Bunge Global (BG)

Bunge Global is a large agribusiness and food company that sits at the heart of global grain and oilseed supply chains, serving food, animal feed and biofuel producers. Most revenue comes from Soybean Processing and Refining at about US$44.3b and Grain Merchandising and Milling at about US$29.7b, with Softseed Processing and Refining adding roughly US$17.8b and Tropical Oils and Specialty Ingredients about US$5.2b after corporate items and eliminations. The stock is valued at roughly US$21.6b.

Bunge Global gives you exposure to essential food and feed demand together with links to renewable fuels, which has supported higher earnings guidance and positive commentary around the Viterra integration and recent capital projects. At the same time, the company is working through weaker free cash flow cover for its dividend, high use of external funding and earnings that have been affected by margin pressure in some segments. If you want a defensive, dividend-paying stock tied to global food and biofuel flows rather than retail shelves, this is one you may want to understand in more detail before deciding how it fits your portfolio.

Bunge Global sits where essential food, feed and biofuel flows intersect, yet the full earnings and balance sheet story often feels only half read. Get the 3 key rewards and 3 important warning signs (1 is major!) and see what might be hiding behind the headline guidance and funding mix.

Hormel Foods (HRL)

Hormel Foods is a long established U.S. packaged food company that develops, processes and distributes meat, nut and other branded food products such as SPAM, Skippy and Planters to retail, foodservice and international customers. Most revenue currently comes from the Retail segment at about US$7.4b, with Foodservice contributing roughly US$4.1b and International about US$730 million. The stock is valued at around US$13.6b.

Hormel Foods is a defensive, dividend paying staple that many investors consider when inflation, higher energy costs and a firmer Fed stance raise recession worries. Investors get well known protein and snacking brands, a roughly 4.8% dividend yield and index inclusion that can support liquidity. The company is also working through compressed margins, weaker recent earnings, higher input and freight costs and a dividend that is not fully covered by current cash flows. For investors who want income and stability from a large branded food business and are comfortable with the trade off between valuation, cost pressure and the company’s margin recovery plans, Hormel is a stock that deserves a closer look.

Hormel’s income story looks stalled on the surface, yet compressed margins and a roughly 4.8% yield could be masking a more interesting reset. Get the 2 key rewards and 3 important warning signs (1 is major!)

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.