When you can invest in a dividend stock on the cheap, it gives you the opportunity to benefit from not just the steady income from its regularly scheduled payments, but also from the capital gains you earn if it rises in value. In many cases, that price appreciation can produce even more profit for shareholders than its dividends.

The three dividend stocks discussed below are trading at attractive valuations today, which means this could be a great time to add them to your portfolio.

1. Cardinal Health

Cardinal Health (CAH 0.35%) has been a fairly stable stock this year, especially given the volatility relating to the COVID-19 pandemic. At the close Friday, it was down by around 0.5% year to date, which isn't bad given that the S&P 500 is still down by 12%. The healthcare services provider currently trades at a forward price-to-earnings ratio of less than 10. That's a decent valuation given that value investors typically look for stocks with a forward P/E of 15 or lower. The company's trailing earnings can't be used to accurately gauge its valuation because they were distorted due to a massive $5.6 billion pre-tax charge the company took in the first quarter of its fiscal 2020 to recognize its estimated liability related to opioid lawsuits.

The one-off charge put a dent in the company's earnings, which typically are small but consistent. Cardinal Health has posted profits in eight of the past 10 quarters, but they've normally been less than 1% of sales. However, for dividend investors what's important to consider is free cash flow, and outside of Q1, this healthcare company has had no trouble generating positive free cash flow. In its most recent quarter, the company generated $620 million in free cash -- more than enough to cover the period's $141 million dividend payout.

Cash falling from the sky.

Image source: Getty Images.

Cardinal Health, a Dividend Aristocrat, has increased its payouts annually for more than 30 years in a row; its increase last year was 1%, from a quarterly payment of $0.4763 to $0.4811. At current prices, it yields 3.9% per year, which is well above the 2% yield of the average S&P 500 stock.

2. AT&T

AT&T (T 0.17%) is an industry leader in telecom, and like Cardinal Health, it has hiked its dividend payments for more than 30 years in a row. The company's first-quarter earnings, which it released Wednesday, fell short of analysts' expectations, and management also withdrew their guidance for the year in light of the COVID-19 pandemic. But it could still be a good year for telecom giant: The launch of HBO Max -- which is set for May 27 -- and the rollout of 5G wireless networks could help it noticeably grow revenues.

Although management admitted that they had limited visibility about what will happen this year, they felt confident that the dividend payment should remain safe.

On AT&T's earnings call, CEO Randall L. Stephenson didn't seem too concerned about the company's payouts:

We remain committed to our dividend. In fact, we finished last year with our dividend as a percent of free cash flow a little over 50%, and even with the current economic crisis, we expect the payout ratio in 2020 to be in the 60s and we're targeting the low-end of that range, which is a very comfortable level for us. 

The company increased its quarterly dividend payments earlier this year from $0.51 to $0.52, for a modest bump up of 2%. At the current share price, the annual yield is around 7%. And with the stock not far from its 52-week low of just over $26, it could be a steal.

With a P/E ratio of around 15, this is another good value stock that could deliver a strong return on investment once things normalize in the economy. And given its high dividend yield, there's plenty of incentive for investors to wait things out. Shares of AT&T are down 24% so far in 2020.

3. Bank of America

Bank of America (BAC 1.35%) isn't getting much love from investors these days. With benchmark interest rates near zero and with fears of a prolonged recession weighing on financial stocks, it's little surprise that this big bank is down more than 37% year to date. However, for opportunistic investors, it could be a great time to swoop in. Currently, it's trading at a P/E of about nine and a price-to-book multiple of 0.8, so it ticks off a lot of boxes for value-oriented investors.

The company's coming off a disappointing first-quarter in which earnings dropped 45% from the prior-year period. However, that was largely due to the company setting aside $3.6 billion in loan-loss reserves as it prepares for the impacts of the recession that most economists agree is already underway.

However, despite the adversity that's coming, the company isn't making any cuts to its dividend today. It is possible that a dividend cut will come -- the bank dialed back its payouts to a bare minimum during the Great Recession, too. But once the economy recovered, so too did Bank of America, and its dividend began to rise again by 2014. For long-term investors, the COVID-19 pandemic shouldn't change the fact that Bank of America is still a solid buy as the stock will likely recover from whatever downturn the economy may face in the next year or two.

The company's current quarterly dividend payments of $0.18 yield 3.3% on an annual basis.

Which is the best stock for investors to buy today?

The most appealing stock on this list has to be AT&T, with its high dividend yield and diversified business that should still see strong growth, especially as long as social-distancing and stay-at-home guidelines remain in place. Telecom is one industry that should continue to do well, even if there's a drop in new subscribers due to the pandemic.

However, all three of these stocks have the potential to generate recurring income for investors, and they can be excellent pillars to build a portfolio around.