How to beat inflation: buy what you already know... and what you eat

Hispanics in the United States are affected by inflation 3:46

New York (CNN Business)--

The stock market is a mess right now, but here's some Wall Street wisdom for these tough times: Eat, drink and be merry.

Especially the latter if you've bought food and beverage stocks. Large consumer staples companies, such as those that make food and beverages, often do well even in the toughest of economic and market turmoil.

That's because even if people cut back on discretionary spending like dining out at restaurants or subscribing to streaming platforms, they still need to eat and it's cheaper to eat at home.

Thus, investors have bet on food and beverage producers in times of high inflation and economic distress.

And that was made abundantly clear on Monday, when multiple food stocks surged even as the broader market tumbled again.

Shares of Campbell Soup, ConAgra, Kellogg, General Mills, Kraft Heinz, Smucker, Tyson Foods and spice maker McCormick rose on Monday.

In addition, all these actions also have rising figures so far this year.

For their part, Coca-Cola and Hershey are also enjoying solid earnings, with both stocks approaching record highs.

It's not just the need factor: Inflation is also improving the fortunes and prospects of many food companies.

Tyson Foods, for example, reported better-than-expected earnings and sales on a healthy trend on Monday, in part due to rising retail prices for beef and chicken.

• Food and energy prices will continue to rise until 2024

Tyson CFO Stewart Glendinning said on a conference call with analysts that so far "consumer demand remains persistent, even as we seek to control inflation through price increases."

And he added that "the relevance of the category allows for continued strong demand," even though prices have risen.

In other words: people are still eating animal protein and are willing to pay for it.

Coca-Cola, Kellogg and Kraft Heinz have also reported solid earnings in recent weeks.

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According to data from FactSet Research, the consumer staples sector has the highest percentage of companies reporting better-than-expected results for the first quarter, led by big profits from frozen-chip maker Lamb Weston, Molson Coors and the produce and flavor giant Archer-Daniels-Midland.

• How long will inflation last?

  The answer is in the past

Another factor that makes these stocks attractive to investors is that many food and beverage companies pay steady dividends with relatively high yields.

That also makes them a potential choice for conservative investors, even as long-term bond yields have soared on fears of inflation.

Kellogg has a dividend yielding 3.2%, roughly in line with the rate on the 10-year Treasury bond.

Coca-Cola and rival Pepsi also post dividends that yield about 3%, along with Oreo maker Mondelez.

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