When the economy is sluggish like we’ve seen during the past few years, consumers look to cut out unnecessary expenses. Often, the luxury items (vacations, jewelry, and large purchase items) get back seat treatment. Yet, consumers won’t shut off the heat, won’t stop eating and will keep the lights on.

Today, family incomes are suppressed and budgets are tighter than ever. Families that once had two incomes are now lucky to have one. Those with cushy desk jobs before the financial crisis are now working for a fraction of their previous salary.

But even in these tough times, families are still buying necessities.

As unemployment maintains above 8%, it doesn’t look like the trend will change anytime soon. Until business owners feel more confident with the economy they won’t start hiring.

Look at all the uncertainty:

• Tight credit conditions make it more difficult for businesses to receive loans.

• The looming fiscal cliff of 2013 is making it more difficult for business owners to predict the tax and financial repercussions that will take place next year. 

• The European marketsremain under significant stress and could unravel at any moment. This could impact overseas sales (exports).

• Business spending appears to have decelerated and surveys suggest further weakness ahead.

• The added financial stress of Obamacare is making it difficult for business owners to determine health costs for employees. #-ad_banner-#

If you add up this uncertainty,then you can see it is unlikely things will improve in the near future. It could take years for the situation to improve. So what’s an investor to do? Sit on the sidelines collecting less than 1% in interest annually? Gamble in the and hope rates don’t rise? Put money in the stock market and hope we don’t see a collapse?

What if you could find a recession-proof company that pays you a dividend yield of 3.4% per year in good times and bad?

We all need food to live. We won’t stop buying food. We will still head to the supermarket each week, no matter how hard times get. But we’ll also shop there when times are good. So you could get the best of both worlds with this recession-proof company.

When you visit the supermarket, does your family purchase any of these brands?

• Baker’s Joy Cooking Spray
• B&M Baked Beans
• Cream of Wheat
• Emeril’s sauces, soups, or seasonings — Bam!
• Maple Grove’s Farm of Vermont salad dressing, pancakes and syrup
• Mrs. Dash salt-free seasoning
• Ortega Mexican Meals, sauce and salsa

If so, then you are already familiar with B&G Foods (NYSE: BGS). These are just a few of their brand lines. The company makes and distributes a range of food products found in supermarkets across the United States, Puerto Rico and Canada.

Check out the chart over the past 12 months…

Best yet, the company currently pays a $0.27 per share dividend, which increased 14.8% in 2011. The current yield based on recent prices is 3.4%. This is much better than you can get in a money market and you have the ability to see an increasing dividend as profits rise.

This is a lesser-known company, giving it appeal as an “off the beaten path” investment idea with great potential. Unlike a bond that pays a fixed payment for the duration of time you own it, a company like B&G Foods can increase its dividend each year, providing some inflation protection.

I think B&G Foods is a good value up to $30 a share. My 12-month price target is $35 a share. This would provide a 20% gain if you buy at July’s price and it hits my target.

Risks to Consider: Just because B&G Foods is a defensive stock, doesn’t mean it can’t go down with the overall market. It still carries market risk. Additionally, with a price-to-earnings ratio above 18, B&G Foods is not cheap and could sell off if a major market correction occurs. It has strong momentum in its favor, but that trend could retreat at a moment’s notice. 

Action to Take –> Though B&G Foods has seen a great ride in 2012 (up nearly 20%), there could be more upside. This defensive stock could hit $35 or higher over the next 12 months, even if the overall market declines. People will continue buying food and companies like B&G Foods should see strong demand even in the toughest of times. This is a good buy under $30 a share.