The Motley Fool just produced a report covering the largest consumer staples stocks in the world. Every company name on that list is worth examining, but one stands out for investors who are worried about a recession. The reason for that is because of both good news and, interestingly, bad news. Here's why PepsiCo (PEP 0.35%), No. 7 on the Motley Fool list, could be a "recession-proof" gold mine today.

What does PepsiCo do?

The first reason to like PepsiCo is positive, as it is, overall, a very well-run consumer staples business. At the highest level, consumer staples are recession-resistant products. They're usually low in cost and bought regularly because they're necessity items. Think deodorant, toilet paper, and food. You wouldn't stop buying any of those even if you were facing economic hardship.

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PepsiCo is focused on food. It's one of the largest beverage makers in the world (Pepsi) and the most important snack maker (Frito-Lay), and it has a portfolio of well-known packaged food brands (Quaker Oats). That's actually more diversification than you'll get from many of the company's peers. It stands toe to toe with any of those peers with regard to distribution strength, marketing acumen, and research and development. Given its massive size (the company has a roughly $200 billion market cap), it can also act as an industry consolidator, swallowing up promising brands to keep its own portfolio in line with consumer tastes.

The strength of PepsiCo's business model is most evident in its dividend history. With over five decades' worth of annual dividend increases, the company is a Dividend King. You don't build a dividend record like that by accident. It requires both a good business model and reliable execution in both good markets and bad ones.

Why buy PepsiCo if you are worried about a recession?

The bad news with PepsiCo is that it isn't hitting on all cylinders today. That's unfortunate, but even the best-run companies have to deal with hard times every so often. Given the company's Dividend King status, history suggests that PepsiCo will muddle through and get back on a better path. But Wall Street is usually focused on the next quarter, not the next decade, so the stock price has been weak. That has pushed PepsiCo's dividend yield up toward the high end of its historical yield range.

With a 3.8% dividend yield, buying PepsiCo will provide you with a well-above-market income stream. If there is a recession, you can happily collect that dividend, distracting you from the market's likely stomach-turning gyrations. But that's not the only positive in the negative news. Even after a recent rally, the stock is still down over 20% from its 2023 highs. So it is in its own personal bear market. If a recession is accompanied by a bear market, which is common, it's likely that PepsiCo won't fall quite as far as the market's current list of high flyers could.

Then there's the basic business model. Consumer staples companies are seen as safe haven stocks. If there is a recession and even a bear market, it might actually lead investors to buy PepsiCo stock. So an economic and market downturn could actually be a catalyst for better stock price performance.

Buy PepsiCo, but think in decades

If you're worried about a recession, PepsiCo could be a good addition to your portfolio. But don't buy it just because you're worried about a recession. Buy it because you believe it's a well-run company that will be able to withstand the hit from an economic downturn, even as it works to get its business back on track with current customer demand.

On that last point, PepsiCo recently bought a Mexican-American food maker and a pre-biotic beverage company. Both moves suggest that it's going back to the successful playbook that has led to solid long-term growth over the decades. That is, in the end, the best reason to buy this currently out-of-favor consumer staples giant.