On a recent trip to the grocery store I noticed items in the carts around me included chips, chocolate pudding and cheese dip. In our current state of inflation, layoffs and paralyzing acts of Mother Nature, it appears that people are seeking refuge in foods that bring a little comfort. Coupled with an up and down stock market and rising food prices for base ingredients, investments in these comfort snacks have the added benefit of dividend payments that can provide a portfolio with a much needed cushion against market volatility. (Find out how to adjust your portfolio when the market fluctuates to increase your potential return, in our article Volatility's Impact On Market Returns.)

Sweet and Savory
Beverage company PepsiCo (NYSE:PEP), best known for its soft drinks like Pepsi and Mountain Dew, is also well-positioned to satisfy consumer snack attacks with its Frito Lay Division that includes Lay's Potato Chips, Doritos, Ruffles and Sun Chips. Frito Lay North America (FLNA) generated $2.7 billion on an annualized basis through March of 2008, which comprised nearly 33% of Pepsi's net revenue. It was followed closely by Pepsi Co American Beverage Division (PCAB), which contributed 28% with $2.3 billion. That's nearly a 7% increase for FLNA and a 6% increase for PCAB over the previous year. PepsiCo's net revenue for the period was up 13% to $8.3 billion sending operating profits up 9% to $1.6 Billion.

Overseas Snack Growth
PepsiCo generates approximately 40% of its net revenue outside of the United States. Two of PepsiCo's fastest growing markets are its Latin American Foods Division, with net revenues up 37% to $971 million, and its Middle East, Africa and Asia Division, which posted a net revenue increase of 31% to $866 million over the same time period. It's also worth mentioning that net revenue growth in the United Kingdom and throughout Europe also improved by 23% to $911 million. The steady decline of the U.S. dollar helped raise net revenue for the year.

While PepsiCo does have hedging strategies in place to counter rising prices for its raw materials and energy costs, investors must stay aware of how a rising U.S. dollar could impact future revenues. (For further reading on this subject, be sure to check out Global Trade And The Currency Market.)

Outside of the Snack Aisle
Comfort-food makers Yum! Brands (NYSE:YUM) and Kraft (NYSE:KFT) also stand to benefit from consumers looking to escape. A pizza craving can be satisfied with a warm slice at Pizza Hut (owned by Yum! Brands) or a DiGiorno oven "Pizza for One" (owned by Kraft) at home. Kraft, who also offers a wide variety of pudding and cheese foods, is paying a 3.4% forward annual dividend yield while Yum Brands is paying 1.9%. For Coca Cola disciples, Coke (NYSE:KO) is also a solid alternative or complement to add to your portfolio. Coke has a 2.7% forward annual dividend yield, and institutions and corporate insiders have taken notice by making purchases during the first quarter of the year.

Pay Attention
Investors should acknowledge if they have found themselves acting out (through recreation, eating, etc.) in order avoid the reality of market pressure. It's likely that you are not alone. PepsiCo is a rebound play in this stressed market situation, since it is trading down 12% YTD. Wall Street analysts have a one-year price target of $80 for PepsiCo, which is currently trading just below $68. PepsiCo also offers a comparable 2.5% forward annual dividend yield.

On a practical level, an investment in comfort foods offers domestic and international exposure, product line differentiation and a buffer against market volatility. On a selfish level, the investment is a bet on the power of snacks and treats' ability to help consumers get through the tough times.

To find out what you should do during financial crunches, check out Five Strategies For Surviving Tough Times.

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