3 Cheap Dividend Stocks I'd Buy Without Any Hesitation

Cheaper isn't always necessarily better. If you can buy something worth owning at a nice discount, though, you should. Here's a rundown of three dividend stocks that not only boast nice dividend yields, but are priced dirt cheap. These low valuations suggest there's little downside left to price in -- only upside potential.

Bristol Myers Squibb

If it seems like drugmaker Bristol Myers Squibb (NYSE: BMY) was suspiciously left out of conversations about COVID-19 vaccines -- and more recently, weight loss drugs -- you're not imagining things. The company has kept its focus on blood-thinning Eliquis and cancer-treatment Opdivo, leaving it off of most investors' radars of late. That's a big reason the stock's made no net progress since 2020.

Don't mistake boring predictability for underperformance, though. This may not be a high-growth pharma company, but it's an income powerhouse, having paid dividends every year for the past 94 years and raising its annual payout for the past 17 of them. You're not only plugging into a forward-looking yield of 4.2%, but buying into a stock that's priced at less than 10 times this year's expected per-share profit.

Target

There's no denying big-box retailer Target (NYSE: TGT) isn't built for the current economic environment. It caters to a value-minded-but-splurgy crowd that's got a few extra bucks to spend on fun. When every dollar counts as it does now, though, it's price-leader Walmart that wins. That's why Target shares have struggled since the inflation-riddled wind-down of the coronavirus pandemic.

There's hope on the horizon, however. Same-store sales improved by 3.8% during the quarter ending in early August, suggesting new CEO Michael Fiddelke has a handle on what's been holding this company back.

Image source: Getty Images.

There's still work to be done, to be sure. But with a forward-looking dividend yield of 3% from a stock that's trading at only 16.5 times next year's anticipated bottom line, the uncertainty of the turnaround's timing is worth the risk.

PepsiCo

Finally, add beverage name PepsiCo (NASDAQ: PEP) to your list of cheap dividend stocks to buy without a second thought, while it's priced at just 16.5 times 2026's expected earnings of $8.40 per share and offers newcomers a starting yield of 4.3%.

It's interesting how shares of seemingly similar Coca-Cola and PepsiCo can perform so differently. Whereas Coca-Cola's shares have recently rallied to record highs, PepsiCo made a new multi-year low earlier this month.

Credit the two companies' different business structures, mostly. Coca-Cola punts most of its bottling work -- and costs, and risks -- to third-party bottlers, while PepsiCo's ownership of most of its production facilities means it's less prepared for the impact of inflation. This has been evident in its relatively recent earnings reports and reflected in the stock's recent performance.

Nothing lasts forever, though. The beverage outfit's third-quarter organic revenue growth of 3.1% is an accelerated growth rate, and an indication that the company has finally adapted to the new market environment. The stock's prolonged pullback since 2023's peak is a window of opportunity that may be on the verge of closing.

James Brumley has positions in Coca-Cola. The Motley Fool has positions in and recommends Bristol Myers Squibb, Target, and Walmart. The Motley Fool has a disclosure policy.