Investors like dividend stocks because they deliver cash flow that can be accepted as immediate income today, or that can be reinvested to amplify long-term returns. These stocks can sometimes also achieve excellent capital appreciation, on par with more traditional growth stocks.

The hard part is finding a dividend stock that's got much more going for it than just its yield. With that goal in mind, let's look at why PepsiCo (PEP -2.97%) and Procter & Gamble (PG 0.60%) look attractive as income investments right now.

Buy PepsiCo for growth

PepsiCo has a well-established business in a mature market, but it is still growing sales at a double-digit rate. Organic revenue jumped 14% in Q1, management revealed in April, as they raised their 2023 sales forecast. Pepsi is now expecting to boost revenue by about 8% on top of last year's 14% spike.

There are weaknesses for investors to watch, too. PepsiCo's profit margin has been reduced by cost spikes, and ideally its latest price increases will start reversing that slump by late 2023. Shareholders are also looking for a better balance between rising sales volumes and increased prices.

Yet Pepsi has a good shot at delivering excellent earnings growth over the next few years as cost inflation settles down. Toss in the current 2.6% dividend yield, and you've got a recipe for great shareholder returns.

Buy Procter & Gamble for stability

Procter & Gamble is not a cheap stock. Investors are paying nearly 5 times sales for the business, or nearly double the valuation of rival Kimberly-Clark. There are good reasons for the premium, though.

The biggest is P&G's market-leading position across dozens of global consumer staples niches, ranging from paper towels to detergent. There's a big financial difference between being the best-known brand in these areas and all the rest. P&G's operating profit margin is 22% of sales, compared to Kimberly-Clark's 14%.

P&G is one of the most efficient companies on the market, too, routinely converting nearly 100% of annual earnings into free cash flow. This success allows management to invest in areas that extend its market share lead while still delivering more cash to shareholders through dividends and stock buybacks.

It's too early to say for sure, but P&G could soon get a boost from weakening cost pressures. Management said in late April that some commodity prices declined this past quarter, and freight costs improved. If this trend holds up into late 2023 and beyond, P&G will be under less pressure to raise prices. And steady demand in this scenario would likely mean higher profit margins.

Looking further out

P&G and PepsiCo would both be hurt by a recession should one develop over the next few quarters. That fact doesn't threaten the wider investing thesis for these companies, though, which have raised their dividends for over 100 consecutive years, between them.

That track record should give investors confidence to look past the likely downturns that occur every few years to focus on the wider growth potential. For P&G and PepsiCo, that potential includes a high likelihood that the businesses will be setting new sales and cash return records five or 10 years from now.