Dividends have historically made up a large percentage of overall gains made by investors. Picking long term dividend-paying winners is no easier than picking winning stocks but those looking for steady dividends may want to consider owning food stocks. This is because companies like Hershey Co. (NYSE:HSY) and J.M. Smucker Co(NYSE:SJM) profit from consumers' insatiable appetite for chocolate, peanut butter and jelly. It's hard to imagine any of these products going anywhere anytime soon.

Chocolate and grape jam aren't the only products that are irreplaceable to consumers. Kellogg Co. (NYSE:K)owns a big bite of the cereal market, and ConAgra (NYSE:CAG) leads the frozen dinner market with its Healthy Choice meals. Hershey dominates the North American chocolate market and Smucker leads in jellies, jams and coffee with its Folgers brand. Dividend yields for these food companies range from 2% to 3%. An ETF in this space is PowerShares Dynamic Food & Beverage Portfolio ETF (NYSEMKT:PBJ).

One of the reasons Warren Buffett bought See's Candies was its ability to raise prices while maintaining and growing its customer base over time. Buffett bought See's Candies for $25 million in 1972 and later invested another $32 million into the business. Over the ensuing decades the company returned more than $1.3 billion to Buffetts' company. Buffett once called See's Candies the "prototype of a dream business." We Fools may not be able to find another See's Candies, but there are some great food companies out there.

The following chart compares investment data on four food companies and an ETF.

Name Yield  Payout Ratio Net Margin Forward P/E YTD Return Dividend Growth Since 2009
Hershey 2%  49.04%  10.65%   26.14  37.08%  51.66%
Smucker 2.1%  41.28%    9.52%  18.88  28.40%  60.58%
Kellogg  2.95%  65.91%    6.52%  16.55  14.06%  25.00%
ConAgra  3.15%  62.46%    3.94%  13.65    8.44%  29.98%
PBJ  1.32%  N/A     N/A   N/A  30.70%  26.92%

PBJ is a non-leveraged ETF that tracks the Dynamic Food & Beverage IntellidexSM Index, which is about 30 U.S. food and beverage companies. The ETF's gross expense ratio is 0.63%. The ETF's top four holdings are Archer-Daniels Midland, 5.39%, General Mills, 4.82%, Flowers Foods, 3.03%, and Boston Beer Co, 2.97%. The ETF was up 30.70% through Oct. 31.

Food and beverage stocks are sensitive to commodity prices. When pricing is fairly stable, it's easy to predict margins. Right now stable-to-falling commodity prices should benefit food companies. It goes without saying that Foolish investors should always be on the lookout for companies with high profit margins and steadily rising dividend. 

Hershey commands a 10.65% profit margin, the best of the group, and a dividend that is up 51.66% since 2009. Smucker isn't far behind with 9.52% margin, and a much higher dividend increase at 60.58%. Kellogg has a 6.52% margin and ConAgra's margin is only 3.94%. ConAgra's earnings were only $0.34 in first quarter 2014, down 44% from $0.61 earnings in the same quarter a year ago. 

Hershey reported third quarter earnings per share of $1.03, $0.03 better than the analyst estimate of $1.00. Revenue for the quarter came in at $1.85 billion versus the consensus estimate of $1.88 billion. Earnings for the quarter were up 33% from $0.77 per share a year ago.This compares with J.M. Smucker which earned $1.24 in the first quarter 2014, up 5.9% from $1.17 a year ago. Earnings for Kellogg were up 6% in the second quarter. The company plans to announce third quarter earnings on Monday November 4, 2013.

A Word of Caution
These companies face some headwinds. Consumer stocks as a group are up more than 20% year-to-date while some critics say the sector is overvalued. Consumer foods companies can also face possible increases in regulation. In Washington state, for example, voters will decide Nov. 5 whether to require labels on food containing genetically modified crops. Food companies are afraid of the additional expense in meeting labeling requirements. ConAgra is among the companies fighting the labeling initiative .

Food stocks are much loved for their reliability of dividends. They also increasingly benefit from stable commodity pricing. Most importantly for Foolish income investors, their dividends tend to increase over time. What's not to love? While high price-to-earnings ratios are cause for concern, particularly in the best stocks like Hershey, there are bargains to be had with other issues.  J.M. Smucker, for one, is probably a better value for the money right now. Over time, these stocks should add value to a portfolio of dividend paying stocks. As always, Foolish investors should do their own research before making any investment decision.