After a rough September, during which the S&P 500 fell 4%, October seems like a great time for investors to scoop up some deals. And whether you're looking to boost your returns or just love to watch money flow into your portfolio every quarter, dividend stocks can be attractive investments. 

Shares of Gilead Sciences (GILD -0.69%) and Kraft Heinz (KHC -1.11%) were both down more than 5% last month, making their dividend yields more attractive in the process. The stocks couldn't be more different -- Gilead is a biotech company with high hopes for its COVID-19 treatment and Kraft controls dozens of grocery store staple brands. Here's a look at why both of these discount buys are worth adding to your portfolio this month.

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1. Gilead Sciences

Drugmaker Gilead Sciences is down 2% this year, trading right around where it started off a volatile 2020. The share price soared in the springtime on the hopes that the company's antiviral, remdesivir, would be effective in treating COVID-19, but fell sharply in recent months after clinical data made it clear that remdesivir was not an all-in-one treatment for the virus. In May, the U.S. Food and Drug Administration (FDA) granted the company an emergency use authorization (EUA) for remdesivir to treat patients with severe COVID-19. (On Aug. 28, the FDA expanded that authorization to include all hospitalized patients.) 

Gilead reported in June that its phase 3 trials of remdesivir showed that during a five-day treatment course, patients with moderate COVID-19 were more likely to see "clinical improvement" by day 11 than those patients who weren't taking remdesivir.

While this was an encouraging result, it wasn't the smoking gun that people were hoping for. In the meantime, vaccine companies advancing clinical trials have been attracting more and more investor attention, pulling them away from Gilead's treatment efforts. And to make matters worse, the FDA rejected the company's approval application for rheumatoid arthritis (RA) drug, filgotinib, in August. It doesn't mean the drug will never earn approval, but the process will be delayed until next year at the earliest.

With some underwhelming news and results, Gilead makes for an appealing contrarian investment right now. Remdesivir could still prove an effective treatment against COVID-19, and the company is currently conducting a trial of an inhaled version of the drug. And Gilead has fared well amid the pandemic, even without its COVID-19 treatment soaring to lofty sales heights. Its HIV product sales of $8.1 billion during the first two quarters of 2020 are up from $7.7 billion during the same period a year ago. Its total revenue for the six months ending June 30 of $10.7 billion is down a modest 2.5% from last year. 

The company currently pays a quarterly dividend of $0.68, which yields 4.3% annually -- well above the S&P 500 average of 2%. If you were to invest $5,000, you could earn $215 in dividend income every year.

Gilead's falling share price also makes it a tempting buy on the dip, as it's now trading at a forward price-to-earnings (P/E) multiple of nine. By comparison, healthcare giant Johnson & Johnson is trading at 16 times its future earnings.

2. Kraft Heinz

Consumer goods company Kraft Heinz is another cheap buy that you can add to your portfolio this October. Its forward P/E of 12 is modest in relation to rival General Mills, which is trading at a multiple of 17. 

The stock's been struggling lately: Shares were down 15% last month. But despite investor bearishness, its actual business is doing well. For the third quarter, Kraft is projecting organic net sales growth to fall in the mid-single digits.

That's consistent with the second-quarter results that Kraft reported on July 30, when its organic net sales grew by 7.4% year over year. Its total net sales of $6.6 billion rose 3.8% from the same period last year. And if not for impairment losses of around $2.9 billion, the company would've easily reported a profit to go along with those otherwise strong results.

Investors should remain optimistic about the company's products, which are likely to stay in demand during the pandemic, and that could make Kraft a stable and safe investment to hang on to right now.

Today, the stock pays investors a quarterly dividend of $0.40 for a yield of 5.3%. On a $5,000 investment, you could earn $265 every year in annual dividend income.

Which stock is the better buy?

You can split your $5,000 investment between these two stocks if you're looking to diversify. But if you're considering just buying one, let's first check how each is performing against the S&P 500.

GILD Chart

GILD data by YCharts

Both of these stocks are in negative territory for the year. Gilead is a tempting buy if you're optimistic about remdesivir and its ability to treat COVID-19. However, that's not something I'd hold out much more hope for, as investors' eyes are still peeled for the winner of the coronavirus vaccine race. That's why instead of the healthcare stock, I'd pick Kraft, which boasts 47 grocery store brand names under its umbrella and is feeling optimistic about its own growth potential through the end of 2020.