Food companies are infamous for their hearty dividend payouts, an attribute that made investing in these shares and exchange traded funds (ETFs) satisfying. As agriculture prices rise and the cost of food cuts into profit, will investors still take a bite?

Matt Andrejczak for MarketWatch explains that dividends are a crucial part of a stock’s total return — and an important source of steady cash in unpredictable markets. They are also critical markers of a company’s financial health and typically investors seek those companies that are going to rise in payouts, not take away.

As commodity prices are on the rise, and shoppers are cutting back, analysts are not bullish on the prospect for dividend growth for some of the largest food corporations. Kraft (NYSE: KFT) and Sara Lee (NYSE: SLE) are two of the companies most endangered of cutting dividends, according to Dallas-based investment researcher Behind The Numbers.

Companies on the other end of the watch list, with the possibility of raising dividend payouts, include Heinz (NYSE: HNZ) and Campbells Soup Co. (NYSE: CPB) as well as ConAgra (NYSE: CAG).

Keep an eye on dividends and food through some of these ETFs:

  • PowerShares Dynamic Food And Beverage (NYSEArca: PBJ)
  • Market Vectors Agribusiness (NYSEArca: MOO)
  • iShares Dow Jones Select Dividend Index Fund (NYSEArca: DVY)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.