2 Dirt Cheap Dividend Stocks to Buy Before It's Too Late

Key Points

• Dividend stocks have historically outperformed non-dividend paying stocks.

• Electric vehicles should power demand for Albemarle's lithium production.

• Constellation Brands has key distribution rights for its Mexican beer brands.

• 10 stocks we like better than Constellation Brands ›

Dividend stocks are an incredibly popular option among investors, especially those looking for a steady income or to reinvest dividends to enable the power of compounding. Generally, these dividend stocks are more stable businesses, financially mature, and are often fairly valued.

However, if you can find some that are trading on the cheap and receive not only a dividend but a potentially increasing share price, it's a double benefit! Here are two such stocks, trading on the cheap and offering a dividend.

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An electrifying stock

Unless you spend a lot of time researching the basic materials sector, Albemarle (NYSE: ALB) is likely a company you haven't heard of. Albemarle is one of the world's largest lithium producers and operates lithium refining plants in the U.S., Chile, and China. Lithium demand is mostly driven by batteries, where lithium is used as the energy storage material, and electric vehicles are a primary source of demand.

The great long-term news is that the future of the global automotive industry is almost certainly electric vehicles, which should drive lithium demand for decades. Not only does Albemarle have top-tier lithium assets, they are among the lowest-cost sources of lithium production on the planet. Further, Albemarle also owns resources in the U.S. and Argentina that are still in the early development phase, enabling a long-term boost for its lithium production volumes in the coming decades.

One of the reasons Albemarle is trading at a discount right now is because CATL's lithium mine was temporarily shut down due to expired permits, a development that was expected to last six to 12 months. Instead the shutdown of only one month means the lithium market will likely remain oversupplied in 2025, leaving lithium prices lower.

While Albemarle's roughly 2% dividend yield won't jump off the page, its discount does. Morningstar rates the company's fair value at $200, meaning it's trading at a roughly 58% discount to fair value. It could be a fantastic opportunity to scoop up what should be a long-term lithium winner while it's on the cheap.

All about the beer

Constellation Brands (NYSE: STZ) is the largest provider of alcoholic beverages in the U.S. across beer, wine, and spirits categories, generating more than 80% of its revenue from Mexican beer imports such as Modelo and Corona. The beverage company also owns a 26% stake in Canopy Growth, which is a medicinal and recreational cannabis producer.

Image source: Getty Images.

First, the good news. Constellation Brands has a wide economic moat thanks to strong brand image and distributor relations from its high-volume Mexican beer portfolio. In fact, it's the big player in the premium import beer segment in the U.S. thanks to its acquisition of exclusive distribution rights for its Mexican beer brands in the U.S. market.

Now for the bad news, and why Constellation is trading on the cheap. Right now the company is dealing with softer beer demand, which is expected to continue in the near term due to consumers pulling back on spending. Management also reduced its fiscal 2026 outlook due to softening demand, macroeconomic uncertainty, and higher costs from tariffs.

Despite near-term headwinds, the company is well positioned long term with its beer business and upcoming pipeline of innovative products including new flavors, nonalcoholic beers, as well as lower-calorie beers that attract a younger consumer.

While investors wait for consumer spending to return to normal Constellation offers a solid 3% dividend yield, an 8.3% total yield when share buybacks are included, and trades at a 41% discount to Morningstar's fair value estimate of $225 per share.

Buy now?

Both of these companies offer long-term upside in their share price as headwinds fade, as well as solid dividends to provide investors with value while you wait. At these steep discounts it could be a good time for investors to dabble in a starting a small position.

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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.