Keeping track of all the market developments over the past year -- including hot IPOs, surging cryptocurrency prices, and a historic short squeeze that dominated the news -- can be exhausting. Investors who chase those headlines might make some money, but they could also be badly burned.

Before investors chase those speculative plays, they should strengthen their core portfolios with undervalued stocks that pay consistent dividends. That might seem difficult as the market and many of the stocks in it hover near all-time highs, but Cisco (CSCO -2.10%), AbbVie (ABBV -2.22%), and Philip Morris International (PM -0.65%) all easily fit the bill.

Let's find out a bit more about these three cheap dividend stocks.

A canvas bag labeled as "dividends".

Image source: Getty Images.

1. Cisco

Cisco, the world's top maker of networking switches and routers, has disappointed investors over the past year with five straight quarters of year-over-year revenue declines.

Its infrastructure platforms business, which sells switches, routers, and other hardware, struggled as the pandemic disrupted network upgrades at enterprise campuses and data centers. That sluggishness repeatedly offset the stronger growth of its smaller cybersecurity business.

But on the bright side, Cisco expects its revenue to finally rise again in the current (third) quarter, as the pandemic-related headwinds wane and it closes its takeover of Acacia Communications (ACIA). Analysts expect Cisco's revenue growth to stay roughly flat in fiscal 2021, but increase 4% next year as its infrastructure business stabilizes.

That outlook isn't exciting, but Cisco is paying a forward dividend yield of 3% to patient investors. It spent just 42% of its free cash flow (FCF) on that dividend over the past 12 months, and it's raised its payout every year since its first dividend payment in 2011. The stock's low forward P/E ratio of 14 should also limit its downside potential in this frothy market.

2. AbbVie

AbbVie struggled over the past few years as its blockbuster arthritis drug Humira, which generated 61% of its revenue back in 2015, faced patent expirations and generic competition. Humira still accounted for 43% of AbbVie's top line in 2020, but it already faces competition from biosimilars in Europe, and its U.S. patents will expire in 2023.

A researcher inspects a pill.

Image source: Getty Images.

But AbbVie hasn't been sitting still and waiting for those sales to plunge. It expanded its oncology portfolio by buying Pharmcyclics in 2015 and Stemcentrx in 2016. Last May, it acquired Allergan, the maker of Botox.

AbbVie's purchase of Stemcentrx flopped after its main cancer drug failed, but it still expects its other acquisitions and partnerships to diversify its business away from Humira. Based on these factors, Abbvie expects its sales to continue climbing until 2023, followed by a year-long decline before returning to growth in 2024 and 2025.

That road seems bumpy, but AbbVie is also paying a forward dividend yield of 4.9% to investors who are willing to ride out Humira's patent expiration. Its dividend only used up 47% of its FCF over the past 12 months, and it's raised that payout every year since its spin-off from Abbott Labs (ABT -1.61%) in 2013.

AbbVie's stock also trades at just eight times forward earnings, making it much cheaper than many of its peers in the pharmaceutical sector.

3. Philip Morris International

Philip Morris International, the overseas tobacco giant that was spun off from Altria (MO -0.92%) in 2008, remains a stronger investment than its domestic counterpart, for three simple reasons.

First, PMI is diversified across a broad range of markets, while Altria is completely dependent on the U.S. market, where adult smoking rates have declined over the past five decades. Second, PMI doesn't make reckless investments like Altria, which blew billions of dollars buying stakes in the e-cigarette maker Juul and the cannabis company Cronos Group -- neither of which offset its declining cigarette sales.

Lastly, PMI's iQOS business, which sells heated tobacco devices, generates much stronger growth than its core cigarette business. Altria also sells iQOS products via a partnership with PMI, but they're clumped together with other "smokeless" products like wine and nicotine pouches.

PMI's core strengths, along with its ongoing price hikes to offset declining cigarette shipments, should help it generate stable returns for the foreseeable future. Its growth decelerated last year throughout the pandemic, but analysts expect its revenue and earnings to rise 9% and 16%, respectively, this year -- which are solid growth rates for a stock that trades at 13 times forward earnings.

PMI pays a forward dividend yield of 5.6%, and it's raised that dividend every year since its split with Altria. That streak should continue since it spent just 80% of its FCF on that payout over the past 12 months.