Like many investors, you may favor stocks that pay a healthy dividend but can also shoot up nicely in value. In terms of performance over the long haul, these growth and income stocks are often comparable to (and sometimes even better than) the market. Yet, in many cases they’re much less volatile because dividends help temper price fluctuations — a feature that’s more desirable than ever, since massive swings in the major market indexes are now so commonplace.

One growth and income stock I strongly suggest you consider has a dividend yield of 3.5%. Because the company has raised its dividend in 46 of the past 50 years, I expect the dividend to remain healthy going forward. (And with a track record of raising dividends like that, it wouldn’t be long before you’d be earning a yield of 5%, 7% — even higher, based on your original purchase price and how long you hold the stock.)

Another tempting feature of this stock is analysts see the per-share price climbing from roughly $49 now to $75-$95 — or around 50%-95% higher — within three to five years. This suggests the potential for yearly returns in the 8.5%-14.5% range. Not bad at all, and quite possibly better than what the market will deliver during that time.

The stock I’m talking about: Kellogg Co. (NYSE: K).

Surprised? I thought you might be. But certainly not because of Kellogg’s yield, which has remained quite healthy at about 3%-3.5% for the past few years. I’m referring more to the stock’s total return. This has averaged a mere 2.5% annually during the past five years — not exactly something that would earn Kellogg a reputation as a growth stock.

As I said, though, analysts predict this is going to change, and I think their predictions are more than just hot air. I like the way Kellogg, the top domestic producer of breakfast cereals (with a one-third market share), has positioned itself to regain momentum. During the past three or four quarters, for example, the company has shown a renewed commitment to brand building and revenue growth by emphasizing promotions and the introduction of new products such as gluten-free Rice Krispies and Crunchy Nut Cereal.

The company has been gradually expanding into the $60 billion domestic snack foods market, too, and has so far captured about a 5% share. Besides brands such as Cheez-It, Famous Amos and Pop-Tarts, snack-food assets have long included Keebler, the well-known cracker and cookie maker Kellogg acquired in October 2000 for $3.9 billion. To get in on China’s emergence, the company bought Chinese cookie and cracker maker Zhenghang Food Co. for an undisclosed sum in June 2008. In January of that year, Kellogg also ventured into the Eastern European cereal and snack-foods market by purchasing United Bakers Group, a leading Russian cracker, biscuit and breakfast cereal manufacturer. The terms of that deal were undisclosed as well.

I find it very encouraging that Kellogg has been getting into emerging markets, since most economists will tell you that’s where the real growth opportunities are. Until a few years ago, Kellogg’s international presence was focused mainly in more mature, slower-growing Western European markets. Currently, about a third of sales ($13 billion a year) and a fifth of operating profits ($1.9 billion annually) come from overseas, and these figures could rise quickly as the company delves further into emerging markets.

Risks to Consider: Rising costs for wheat, soybean oil, sugar and other product inputs may be the major headwind, though this would likely hurt competitors as much as Kellogg.

Action to Take–> If you’re looking for growth and income, then consider buying shares of Kellogg. The dividend is likely to remain strong, rising at a 7% compounded annual rate through 2016, according to analysts. I also believe recent growth initiatives make it feasible for the company to increase sales and earnings per share at 7%-8% annually, as analysts predict.

Share repurchases typically enhance a stock’s value, so it’s a good sign that Kellogg has bought back 1.5% of outstanding shares, on average, each year for the past five years. The company says it plans to buy back another $1.5 billion of its stock during the next two years.

Now looks like a good time to invest in Kellogg from a valuation perspective as well. The stock is trading around 14% below the 52-week high of nearly $58 a share, and the price-to-earnings (P/E) ratio of about 15 is much lower than the industry average of 20. Conservative investors may also appreciate that the stock only tends to be about half as volatile as the overall market.