A common goal of income investors is to use dividends to cover a portion of or all of their expenses in retirement. That's why they should pick dividend stocks that provide indispensable products with few or no available substitutes.

Two dividend stocks that I believe fit these criteria are PepsiCo (PEP -0.59%) and Essential Utilities (WTRG -0.46%).

Two people raise their glasses filled with iced soda

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1. PepsiCo

PepsiCo is a large-cap consumer staples company selling food and beverages in more than 200 countries and territories around the world. It boasted 23 brands that generated at least $1 billion each in estimated retail sales last year with household names, including Pepsi, Lipton Tea, Lay's, and Doritos.

The company's steady innovation and receptiveness to evolving consumer preferences are what make it a leader in North America in both the snacks and liquid refreshment beverage (LRB) categories.

And despite a 9% retail share in the $570 billion global beverages market and a 7% share in the $550 billion global snack foods market, PepsiCo believes it can increase its share by expanding its presence in emerging markets. Both categories are also expected to grow 4% to 5% annually through 2025.

Analysts expect PepsiCo's annual earnings growth will accelerate from 5.3% annually in the previous five years to 9.8% over the next five years, which should be enough to fuel the company's mid-single-digit dividend increases well into the future.

Supporting that possibility is PepsiCo's reasonable payout ratio of 69%. As of 2021, this Dividend Aristocrat has raised its payout for 49 consecutive years. Assuming the company raises its dividend again next year, it will attain the even more prestigious title of Dividend King.

Trading at 25 times expected 2021 earnings, PepsiCo is reasonably priced, and shares yield 2.8% as of this writing. Income investors can add the stock to their portfolios for another few decades of steady dividends and growth.

Water flows out of a faucet and down the drain.

Image source: Getty Images.

2. Essential Utilities

The second pick for investors looking for reliable and growing dividends is the water and natural gas utility, Essential Utilities. The company provides its services to an estimated five million people in nine U.S. states throughout the Midwest and East Coast, as well as Texas.

In the first half of 2021, Essential Utilities generated 49% of its $981 million of revenue from the regulated water segment, which includes water and wastewater services. Another 49% of the top line came from the regulated natural gas segment, which heats homes and businesses during the colder months of the year.

Besides the staying power of major utilities like water and natural gas, another thing investors should like about this company's business model is the fact nearly all of its revenue in that same period was regulated by government entities. This dynamic is what allows the company to steadily grow its revenue and earnings.

And with Essential Utilities planning to invest $3 billion through 2023 to expand and improve its water and natural gas infrastructure, the company expects that it will be able to generate 5% to 7% annual earnings growth during that time.

And as the company's current payout ratio of 58% is actually below management's long-term target of 60% to 65%, the company should be able to continue growing its dividend in the years ahead. Its latest payout increase of 7% extended its dividend growth streak to 30 years.

Although Essential Utilities isn't exactly a bargain at 29 times this year's expected earnings, investors can still rest easy with this stock in their portfolios as they collect a dividend currently yielding 2.2%.