Even when the economy turns ugly, consumers still need to buy the basic products that consumer staples companies sell. This is why the sector is seen as defensive, a fact that is attracting investors right now. Notice how the Vanguard Consumer Staples ETF is only down around 3% so far in 2022, while the S&P 500 Index is off by roughly 20%.

And yet, there are still some overlooked bargains to be had in the consumer staples space, including Hormel Foods (HRL 1.27%) and Clorox (CLX -0.58%). Let's take a closer look at both.

A generous and growing dividend

Hormel makes food products, including its namesake brand, SPAM, Skippy, and Planters, among many others. It has leading positions throughout the grocery store, as well as a growing international business and a unique food service division (it sells cooked meats that help keep costs in check for restaurants). There is a lot to like about the company, but the stock is down around 6% so far in 2022, notably lagging the average consumer staples stock.

Two people with a shopping car in a grocery store.

Image source: Getty Images.

There's a couple of issues here. A company-specific headwind is the hit that Hormel's turkey business is taking from avian flu. Then there's inflation, which is impacting peers as well, but is still a problem it has to deal with somehow. Mostly, though, these are headwinds that should be solved over time. And despite these bumps in the road, the company posted record sales in fiscal 2022, so it is hard to suggest that Hormel is faltering in a massive way.

That said, Hormel's stock has one attractive feature that investors shouldn't ignore: its historically high dividend yield of 2.4%. The dividend has been increased annually for over five decades as well, so this Dividend King has proven it can survive hard times. All in, this reliable dividend payer could be exactly what conservative income investors with a little cash are looking for right now.

Down for a reason

Clorox's stock is off by roughly 20% so far in 2022. It is deeply underperforming the consumer staples area, and is even ever so slightly behind the S&P 500 Index. That's not a good sign for this consumer staples stock. There are two main issues.

First, the company's cleaning products saw a huge demand boost early in the coronavirus pandemic in 2020. Now that the world isn't focused as much on cleaning, demand is coming down and crimping sales. At the same time, inflation has hit the company's top and bottom lines very hard. Management is taking steps to address these issues, but it is going to be a little while before things are back in a more normal state. Simply put, there's no easy fix, and investors are going to have to be patient. But Wall Street isn't patient, and that's a potential opportunity for long-term dividend investors.

To put a number on that, the 3.2% yield here is toward the high side of the company's historical yield range. The dividend, meanwhile, has been increased annually for over four decades. That's an impressively long streak that shows Clorox has muddled through hard times before. The unusual spike in demand in 2020 has distorted the underlying trends here, making it hard to like Clorox today. But the company appears to be doing the right things (investing in innovation and advertising) to grow its business over the long term.

Risk versus reward

There's no free lunch on Wall Street, so you have to take on some risk if you want to buy attractively priced stocks like Hormel and Clorox. While both have warts today, they also have impressive business histories and historically high yields. With the markets volatile and consumer staples doing relatively well, these two industry laggards might be just what you are looking for today.