7 Food Stocks That Will Deliver Tasty Returns

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No matter what happens with the economy, one fact will always hold true — people need to eat. The past few years have seen the industry change significantly as consumers’ definition of ‘healthy” changed from low fat and low sugar to organic and natural. While this shift left some big brands struggling to remake their images, others were able to change with the times and another still others held on to their ‘unhealthy’ stigma and wore it as a badge.

From agriculture to fast food to casual dining, the industry of eating is poised to have a prosperous year, and investors would be wise to add a few of these food stocks to their portfolios in order to reap the benefits.The year ahead is likely to be a good one for food stocks as economic improvement and rising consumer confidence gives the public a few reasons to spend more on their sustenance.

So here are seven restaurant stocks to consider picking from the menu.

Food Stocks Delivering Tasty Returns: Archer Daniels Midland Company (ADM)

Food Stocks Delivering Tasty Returns: Archer Daniels Midland Company (ADM)As an agricultural firm that processes corn, wheat and other commodities, Archer Daniels Midland Company (NYSE:ADM) is a way for investors to invest in food in its earliest stages. The company does everything from processing to storing and transporting agricultural commodities and makes for a good buy right now even though the broader market is up.

The growing population means ADM is unlikely to want for demand any time soon and the firm’s efforts to grow its organic business could pay off in the coming year.

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However, one of the most compelling reasons to own ADM stock is the company’s dividend, which, at nearly 2.9%, provides investors with a steady stream of passive income. Not only that, but the firm has consistently raised its dividend payments every year for over 40 years — so investors can expect to see another hike this year.

Food Stocks Delivering Tasty Returns: Starbucks (SBUX)

Food Stocks Delivering Tasty Returns: Starbucks (SBUX)Shares of coffee giant Starbucks Corporation (NASDAQ:SBUX) have been relatively stagnant for the past year and more recently, the company faced a great deal of scrutiny over CEO Howard Schultz’s decision to step down. Again.

However, now is a better time than ever to buy SBUX stock because the firm’s valuation has come down considerably, making it a much better buy.

One of the big reasons to invest in the coffee chain is the Starbucks’ mobile app- which has been wildly successful since its introduction. The firm is now facing a dilemma with its online customers creating traffic jams while picking up their orders in-store.

This issue is definitely solvable though, and having a mobile ordering platform that is becoming too popular is not a bad problem to have.

Food Stocks Delivering Tasty Returns: Yum! Brands (YUM)

Food Stocks Delivering Tasty Returns: Yum! Brands (YUM)Taco Bell, Pizza Hut and KFC parent company Yum! Brands, Inc.(NYSE:YUM) is a good buy for investors looking for a turn-around story. The firm recently spun off its Chinese arm, which will be a boon for the firm as the Chinese company is paying a 3% royalty rate to Yum! Brands.

That influx of cash will be bankrolling YUM through a transitional phase in which it tries to get its struggling Pizza Hut brand back into consumers’ good graces.

Both Taco Bell and KFC saw same-store sale rise in the fourth quarter, offsetting a disappointing 2% decline in Pizza Hut comps. The question is whether or not YUM will be able to save Pizza Hut and return the chain to profitability.

CEO Greg Creed has promised to revive the brand by improving the firm’s marketing efforts and sending a more clear message about where Pizza Hut fits into the pizza hierarchy. At the moment, Pizza Hut is lost somewhere between fast-food and casual dining, but with a more clear vision and better communication, the firm will be able to turn things around quickly.

Food Stocks Delivering Tasty Returns: Dave & Buster’s (PLAY)

Both Taco Bell and KFC saw same-store sale rise in the fourth quarter, offsetting a disappointing 2% decline in Pizza Hut comps. The question is whether or not YUM will be able to save Pizza Hut and return the chain to profitability. CEO Greg Creed has promised to revive the brand by improving the firm’s marketing efforts and sending a more clear message about where Pizza Hut fits into the pizza hierarchy. At the moment, Pizza Hut is lost somewhere between fast-food and casual dining, but with a more clear vision and better communication the firm will be able to turn things around quickly. Food Stocks Delivering Tasty Returns: Dave & Buster’s (PLAY)Restaurant chains have been struggling over the past year as customers opt to stay in and cook for themselves, but Dave & Buster’s Entertainment, Inc.’s (NASDAQ:PLAY) unique format has made the sports bar/adult amusement center successful despite declining interest in going out to eat. For that reason, PLAY stock has outperformed its casual dining peers for the past 18 quarters.

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Dave & Buster’s offers an experience rather than just a meal — and it’s one that can’t be replicated at home.

Not only has Dave & Buster’s been able to thrive in a difficult environment, but the firm has the potential to capitalize on other brick-and-mortar retailers’ difficulties by expanding into cheap real estate left behind by department stores that have had to downsize.

Food Stocks Delivering Tasty Returns: Zoe’s Kitchen (ZOES)

Food Stocks Delivering Tasty Returns: Zoe’s Kitchen (ZOES)For investors looking for a growth play, look no further than Zoe’s Kitchen Inc (NYSE:ZOES). The fast-casual restaurant chain delivers Mediterranean fare that is both “fresh” and “wholesome.” ZOES has seen 27 quarters of same-store sales growth, and the firm’s natural ingredients fit in well with consumers’ perception that ‘real’ food is healthier.

Zoe’s Kitchen has already expanded to more than 200 locations around the country, but management is hoping to take that figure to 400 over the next three years. That kind of growth is certainly doable considering that the casual dining industry is due for a lift due to lower gas prices and an improvement in unemployment figures.

Food Stocks Delivering Tasty Returns: Pinnacle Foods (PF)

Food Stocks Delivering Tasty Returns: Pinnacle Foods (PF)Packaged foods distributor Pinnacle Foods Inc (NYSE:PF) is another stock to consider for investors looking to add food stocks to their portfolios. The company’s efforts to reduce costs coupled with its strategic acquisition ofBoulder Brands make this stock well positioned to deliver sizable returns this year.

Management at PF is currently working on a major restructuring program designed to significantly cut costs and improve margins.

The firm’s focus on efficiency and productivity bodes well for the upcoming year, especially considering PF recently acquired Boulder Brands Inc. in order to better meet consumers’ changing preferences.

Food Stocks Delivering Tasty Returns: McDonald’s (MCD)

Food Stocks Delivering Tasty Returns: McDonald’s (MCD)McDonald’s Corporation (NYSE:MCD) has fallen out of fashion on Wall Street because the fast-food restaurant’s offerings don’t fit in with the public’s rising interest in organic, healthy dining options. However, MCD is still a good buy, especially for income investors.

The company has proven that there is still viable demand for the golden arches, as the company’s same-store sales increased by 2.7% in the fourth quarter of 2016. For the full year, comps were up 3.8%.

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Not only does MCD offer a solid, well-established business that has become ingrained in the restaurant industry worldwide, but the firm offers a near-3% dividend yield. Income investors looking to add food stocks to their portfolios shouldn’t overlook MCD, because that figure is likely to increase in the years to come — McDonald’s has raised its dividend payout every year for the past four decades.