3 Dirt Cheap Dividend Stocks to Buy and Hold

The S&P 500 is up this year, and it's been on a multi-year rally, but some stocks have missed out on all of the fun. While it makes sense that the stocks of declining businesses have lost value, there are some great companies that investors have overlooked.

Not only are these stocks overlooked, but they also offer regular dividend payments, so you get to receive cash flow while waiting for investors to notice the opportunity. These three stocks have respectable yields and may gain value once more people notice them.

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1. Cisco (CSCO)

Cisco Systems (NASDAQ: CSCO) has been a slow mover for several years, but AI tailwinds have finally propelled the stock past its dot-com bubble highs. It's actually on pace to beat the S&P 500 this year, and Cisco's fiscal 2026 first-quarter results suggest that this year's momentum may continue.

Revenue increased by 8% year over year, and while that's not a big growth rate for a P/E ratio that's approaching 30, investors are excited about Cisco's AI segment. The press release mentioned that Cisco's artificial intelligence (AI) infrastructure orders reached $1.3 billion, "reflecting a significant acceleration in growth." Big tech companies poured a lot of money into AI this year, and they are forecasting higher budgets next year.

Net income inched up by 5% year over year, so Cisco's status as an undervalued dividend stock heavily depends on its AI infrastructure sales. If that segment continues to accelerate, Cisco may wind up being a steal at its current price, just as International Business Machines shocked many investors by doubling in roughly two years after enduring a lost decade.

Cisco's yield currently exceeds 2%. Investors get to enjoy solid cash flow now while waiting for Cisco's stock price to march higher if AI infrastructure demand continues to soar.

2. Digital Realty Trust (DLR)

Digital Realty Trust (NYSE: DLR) is a real estate investment trust (REIT) that serves more than 5,000 customers across over 300 data centers. Some of those customers are big tech companies that are heavily investing in AI. While some AI stocks have gone parabolic, Digital Realty Trust hasn't achieved liftoff quite yet.

The stock is actually down by roughly 10% this year, but revenue and profits have been rising. For instance, the data center REIT delivered 11% year-over-year revenue growth in the third quarter, plus 32% net income growth.

Promising earnings results and AI tailwinds suggest that the stock will get out of its current funk. The REIT is an established leader in the data center industry that should benefit as AI infrastructure expands. Investors get a yield above 3% while waiting for shares to regain momentum.

3. Charles Schwab (SCHW)

Despite being one of the largest financial firms, Charles Schwab (NYSE: SCHW) remains undervalued. The company wrapped up the third quarter with $11.6 trillion in assets under management, which is up by 17% from a year ago.

The rise in AUM coincides with a 30% year-over-year boost in daily average trade volume and Schwab's fourth consecutive quarter of 1 million new brokerage account openings. High user engagement and new customers are fueling Schwab's AUM and revenue growth. Revenue increased by 27% year over year, while net income surged by 67%, and those are two growth rates that you don't normally see for a stock that is valued at a 21.3 P/E ratio.

Schwab's dividend currently stands at roughly 1.20%, but it is a dividend growth stock. Schwab gave out a quarterly dividend of $0.25 per share and raised it to $0.27 per share this year, marking an 8% increase. The fintech company offers a decent margin of safety and respectable dividend payouts that will compound quicker than most stocks.

Charles Schwab is an advertising partner of Motley Fool Money. Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems, Digital Realty Trust, and International Business Machines. The Motley Fool recommends Charles Schwab and recommends the following options: short December 2025 $95 calls on Charles Schwab. The Motley Fool has a disclosure policy.