Last year's rally was nothing short of spectacular, but 2010 has brought a bit of a rough ride, with investors having had to deal with the European Union debt crisis, the BP oil spill, and various legislative uncertainties. The threat of a double-dip recession has kept many investors on the sidelines, or even worse, led to them pulling their money out of stocks.

Are things getting worse?
There has been a tremendous rush of money into fixed-income instruments, especially corporate bonds and various bond funds. In the past four months, U.S. stock funds have experienced outflows of about $48.9 billion; large growth and value funds have taken the biggest hit.

So it should come as no surprise that last week, the Reuters/University of Michigan preliminary survey of consumer sentiment fell to 66.6 in September from 69.8 in August, marking the lowest point since August 2009. An impaired household balance sheet, pressure on housing prices, and consistently tight credit (not to mention high unemployment) have combined to strap family members for cash and increase their pessimistic outlook. Furthermore, the stock market took a tough dive in August, with the S&P 500 dropping by about 5% -- not exactly the kind of movement you want to see when evaluating household wealth.

Realistically, we shouldn't be too surprised that consumer sentiment is pretty low. What exactly is it that regular people should be feeling great about? Job certainty? A bullish market? Political stability? Nope -- we don't have any of those. In addition, according to BNP analyst Julia Coronado, "wealth affects consumer spending decisions with a roughly two-year lag, so the dramatic loss of wealth of the past two years will continue to weigh on consumer spending for some time." In other words, despite last year's terrific upturn, average investors have still seen a major decline in wealth, and that will continue to drag on spending, until at least the beginning of 2011.

An interesting way to view the market
According to a Reuters report, the entire drop in consumer sentiment came from consumers in households with incomes above $75,000. Conversely, the confidence of lower-income families has actually improved, which is quite surprising considering the near-10% unemployment that still plagues the nation. Most likely, higher-earning families are concerned about the potential that taxes on families with more than $250,000 in income may rise. If you believe that the U.S. recovery has stalled and that higher-income families may start to rein in their spending, I'd suggest avoiding Tiffany (NYSE: TIF), Urban Outfitters (Nasdaq: URBN), and Luxottica Group. Not only do these high-end retail stocks depend on wealthy individuals to continue discretionary spending, but also they are all trading at pretty lofty valuations. Not exactly an attractive combination.

However, if lower-income families are actually becoming more confident, that might bode well for consumer staples companies, especially ones that provide value-oriented products or services. To search for stocks that could hold up well, especially if these doldrums continue, I screened for consumer staples companies trading for reasonable P/Es and that pay dividends above 2.7% (the current yield for a 10-year Treasury). I found these to be enticing:

Company

Sector

P/E Ratio

Dividend Yield

SUPERVALU (NYSE: SVU)

Grocery stores

6.9

3.1%

Cal-Maine Foods (Nasdaq: CALM)

Packaged foods and meats

10.7

3.8%

Reynolds American (NYSE: RAI)

Tobacco

14.0

6.2%

Altria Group (NYSE: MO)

Tobacco

14.1

6.5%

Sysco (NYSE: SYY)

Food distribution

14.7

3.4%

Source: Capital IQ, a division of Standard & Poor's.

The Foolish bottom line
All five of these stocks pay a really great dividend, and most have been doing so for quite some time. Sysco, for instance, has been paying dividends since 1970 and has increased that dividend for 33 years in a row. Altria is even more impressive, boosting payments for 43 years in a row when you account for its various spinoffs over the years. And while cigarettes may seem like a purely discretionary item, time has shown that they are not: Despite an increase in taxes and one of the worst recessions in ages, companies like Altria have been able to boost market share and dish out stellar profits.

These may not be the high-flying stocks that promise five or 10-bagger status, but if you're looking for some safe plays in what you see as a downtrodden market, these companies could be a great place to start your research.

Have a strong feeling about any of the stocks above? Let us hear it in the comments section below.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Jordan DiPietro doesn't own shares of the companies mentioned. Sysco is a Motley Fool Inside Value pick and an Income Investor pick. The Fool owns shares of Altria Group, Cal-Maine Foods, and Sysco. Try any of our Foolish newsletter services free for 30 days. The Fool has a disclosure policy.