Top-quality food stocks can make great additions to your portfolio, for a number of reasons.

For one, these companies are more resistant to economic downturns because their products are in no way discretionary purchases: even when a deep slump hits, people have to eat. That makes their shares much less volatile than the overall market, so they’re a good way to temper your exposure to more unpredictable sectors, like technology or resources.

But the best of the best aren’t just resting on their laurels; they’re also investing in new foods that will help them enter new markets and capitalize on long-term trends, like the move toward healthier eating, which has gained momentum over the past decade.

To top it off, foodmakers’ steady sales give them the predictable cash flows they need to pay dividends. And their payouts are often attractive: General Mills (NYSE: GIS), for example, has been paying dividends without an interruption or a cut for longer than most American companies have even been around: 113 years—and counting. Its current quarterly payout of $0.33 a share—or $1.32 a year—yields 3.3%.

The company controls some of the most recognizable brands in the food business, including Hamburger Helper, Cheerios, Wheaties and Betty Crocker.

Moreover, because of its stability—General Mills stock currently sports a beta rating of just 0.16, with a rating of 1 being equal to the market’s volatility—the shares fell less sharply than the overall market during the 2008-2009 financial crisis. However, the stock has languished over the past year, remaining mostly flat, compared to a 21% gain for the Dow.

One factor holding back all food companies has been rising ingredient costs, which many, including General Mills, have had difficulty passing on to consumers due to the slow economy.

Acquisitions Help Broaden General Mills’ Customer Base

Still, there was a lot for investors to like in the company’s latest results, which it reported yesterday.

In its fiscal 2013 first quarter, which ended August 26, 2012, General Mills’ sales rose 5.3% from a year ago, to $4.05 billion. Net earnings rose 35.3%, to $548.9 million, or $0.82 a share.

Excluding unusual items, earnings rose to $0.66 from $0.64. That topped the consensus estimate of $0.62, though sales were just shy of the $4.08 billion the Street was expecting.

Acquisitions were a big reason for those gains, mainly its purchase of Yoplait International last year, which pushed up General Mills’ international sales by 27%. Sales fell 1% in the U.S. and 2% at the Bakeries and Foodservice segment.

Purchases like Yoplait are a big part of the company’s plan to offset sluggish growth in the U.S. by expanding overseas. Thanks to this strategy, the U.S. accounted for 61.6% of General Mills’ retail sales in the latest quarter, down from 65.2% a year earlier.

In the previous quarter, the company bought Food Should Taste Good (a natural snack food company based in Massachusetts), Yoplait Ireland and Indian spice and sauce maker Parampara Foods. In May, it added leading Brazilian snack food company Yoki for $875 million.

General Mills’ big overseas expansion isn’t without risk, particularly in light of slowing economic growth in some developing countries, including India. It also increases the company’s exposure to fluctuating exchange rates, which can have a big impact on its overseas sales.

However, General Mills is being careful with its purchases, and mainly targeting well-known companies—like Yoplait and Yoki—that tie into its current products and give it distribution networks it can use to sell more of its other foods in these markets.

Return of the Green Giant

General Mills also launched more than 100 new products around the world in the latest quarter, and plans to continue rolling out new foods—including 40 new yogurts—this year.

In its earnings release, the company said that a number of these new foods made strong contributions to its sales growth in the latest quarter. Most were healthier products, such as Apple Cinnamon Chex and Fiber One Nutty Clusters & Almonds cereals, Nature Valley Protein Bars and Progresso Recipe Starters cooking sauces.

The company plans to ramp up its advertising spending to support its new products. Part of its plan involves reviving one of its original mascots, the Green Giant, who had until now been relegated to a background role in the company’s marketing. Advertising Age ranked the Giant as the No. 3 advertising icon of the 20^th century, behind the Marlboro Man and Ronald McDonald.

The new Giant will apparently be much more talkative: in the new campaign, he will encourage kids to take the “One Giant Pledge” to eat one more vegetable a day. The TV spots will also direct viewers to a Facebook page, where they can interact with the Giant and download “ho-ho-ho” ringtones. General Mills also plans a number of in-store promotional efforts to further bolster its new foods.

Combining well-known icons like the Giant and new techniques, such as social media marketing, will help the company attract more customers and stand out from its bargain-priced competitors.

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