The research team at Deutsche Bank A.G (NYSE: DB), recently put out an in-depth piece on the food industry as a defensive place to put money and keep earning dividends. They point out that after a challenging 2010-2012 period, food companies are getting some relief. Middle income consumers are spending more freely again, inflation is manageable, productivity programs are on track and companies are using free cash flow to either deleverage, fund their dividends or repurchase stock.

When investors look for stocks to add to their portfolios at this elevated level of the stock market. one good thing to keep in mind is demand. Some products, and the companies that make them, go in and out of style quickly. In the case of the major food stocks, many of them have products that have been staples of the American consumer for decades, products that many of us have in the pantry at home.

With some positive wind at their backs, Deutsche Bank recommends these top food stocks to buy.

Amira Nature Foods Ltd. (NYSE: ANFI) is the top small-cap name on the list. Founded in 1915, Amira has evolved into a leading global provider of packaged Indian specialty rice, with sales in more than 40 countries today. This is a busted initial public offering, which may have some great value at this level. The Deutsche Bank price target is $13. The Thomson/First Call estimate is at $12.50. A move to the target would represent a 40% gain for investors.

Dean Foods Co. (NYSE: DF) recently spun off its organic milk business. The Deutsche Bank target for this well-known name is $13. The consensus estimate has not been reestablished to account for the spin-off, which occurred last Friday.

General Mills Inc. (NYSE: GIS) sells ready-to-eat cereals, refrigerated yogurt, ready-to-serve soups, dry dinners, shelf-stable and frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grains, fruit and savory snacks, ice cream and frozen desserts and grain snacks, as well as a range of organic products, including soups, granola bars and cereals, worldwide. The Deutsche Bank target for this market leader is $55, but the consensus is lower at $50. Shareholders are paid a tidy 3% dividend.

J.M Smucker Co. (NYSE: SJM) is a name familiar to investors. While best known for its iconic jelly products, the company also makes Folgers coffee, ice cream toppings, pancake syrup and more. The Smucker family still owns more than 3% of the stock. Deutsche Bank has a $109 price target. The consensus target is at $105.50. Shareholders are paid a 2% dividend.

Kellogg Co. (NYSE: K) is another well-known name on the Deutsche Bank list of stocks to buy. The stock’s sharp rise over the past year has already helped drive it to a level that is relatively expensive compared to the rest of its industry. Deutsche Bank has a $74 price target, but the consensus for the stock is at $66. Shareholders receive a 2.750% dividend.

Mead Johnson Nutrition Co. (NYSE: MJN) was followed and owned by more than 30 hedge funds at the end of 2012. Mead Johnson has the 13th highest P/E, 26.3 times earnings, among companies from the processed and packaged goods industry. Deutsche Bank has a $94 target. The consensus is below current trading levels at $80. Investors are paid a 1.70% dividend.

McCormick & Company Inc. (NYSE: MKC) announced that its net sales advanced by an annual rate of 3% to $934 million in the first quarter of 2013. The company posted an per-share earnings of $0.57, compared to $0.55 in the first quarter of 2012. Deutsche Bank has a $77 target. The consensus is at $75.50. Shareholders are paid a 1.80% dividend.

PepsiCo Inc. (NYSE: PEP) is the final name on the list of food stock to buy. Even with Pepsi’s equity stability and consistent dividend returns, it is still underperforming the S&P 500. Now may prove to be a good time to enter the stock. The Deutsche Bank price target for this venerable leader is $85. Consensus estimate is higher at $87.50. Investors are paid a 2.70% dividend.

There is an old market adage that says that stocks go up like an escalator and down like an elevator. If that is the case after the current rally, we may be primed for a steep, but quick decline. If any area is somewhat defensive in nature, it is these quality food stocks, which offer growth and dividends. As we have suggested recently, investors may want to scale in money or buy one-half positions and wait for a sell-off to add the rest.

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