Analysts may not typically group a healthcare stock like Cardinal Health (CAH 0.29%) together with a telecom like Lumen Technologies (LUMN 0.62%). However, they have one intriguing commonality: Both are dividend stocks that offer generous payouts amid struggles with valuation growth. Despite their modest multiples, both stocks provide a low-cost income stream in industries poised for long-term stability.

1. Cardinal Health

Cardinal Health is a healthcare services company that manufactures medical and laboratory products, distributes pharmaceuticals, and offers performance and data solutions for healthcare facilities.

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Almost 90% of hospitals and over 10,000 specialty physician offices rely on Cardinal. The breadth of facilities covered gives Cardinal a competitive advantage. With so many hospitals in its system, competitors would find it difficult to establish a comparable distribution network.

Cardinal suffered during the pandemic as patients postponed elective medical procedures. This likely explains the modest 13% share price growth over the last year, as well as the muted revenue growth.

For the first three quarters of fiscal 2021, its revenue of $119.9 billion increased by about 3% compared with the first nine months of fiscal 2020. Net earnings came in at about $495 million for that period, versus a massive $4.4 billion loss over the same time last year.

Legal costs have hampered Cardinal in recent quarters. The company has spent $1.1 billion so far in 2021 due to litigation charges regarding an opioid settlement last year. During the same period the previous year, the company paid more than $5.7 billion for this expense.

Despite this setback, the dividend remains safe. Cardinal generated almost $1.5 billion in free cash flow in the first nine months of the fiscal year. This allowed it to cover $432 million in dividend expenses.

Additionally, management just approved an additional payout hike. This will translate into an annual dividend of just over $1.96 per share, a cash return of about 3.4%. Also, with a history of annual dividend increases going back more than three decades, Cardinal holds Dividend Aristocrat status. Companies usually choose to maintain their Aristocrat status since those that lose that designation tend to experience massive sell-offs. Thus, a payout cut does not appear likely.

Cardinal Health appears inexpensive by just about any measure. It sports a P/E ratio of just 15, a level consistent with historical norms. Furthermore, Cardinal projects profits of between $5.90 and $6.05 per share for the current fiscal year, translating into at least 10% growth compared with the previous year. Since the increased profits will probably lead to a higher free cash flow, Cardinal's payout should remain safe for the foreseeable future.

2. Lumen Technologies

Lumen has turned into a comeback story among dividend stocks. Previously known as CenturyLink, it fell out of favor as consumers cut phone and cable TV services.

However, it has leveraged its 450,000-mile fiber network into what it calls "fourth industrial revolution" (4IR) services, including edge computing, cloud services, infrastructure, network, security, and other IT offerings.

Moreover, even as the world switches to wireless, 5G still needs fiber to connect cells. Thus, Lumen has repurposed its fiber network to provide the backbone for the 5G networks of one-time competitors.

This has boosted confidence in the stock, which has risen by more than 40% over the past year to sell for about 8 times earnings. Although its multiple has changed little in recent years, it sells for a substantially lower valuation than 5G titans such as Verizon and T-Mobile.

Despite this success, Lumen is still treading water in many respects. In the latest quarter, revenue fell 4% from year-ago levels. Still, it cut interest expenses and earned gains on the extinguishment of debt. This helped net income rise 51% to $475 million.

Additionally, free cash flow for the quarter came in at $850 million, more than double the $385 million generated in the year-ago period. Early debt retirements, favorable changes in asset values, and lower capital expenditures helped to boost cash.

This part of Lumen's story is great news for dividend investors. The cash flow covers the $294 million in dividend expenses -- a good thing because the $1-per-share payout amounts to a yield of 7%, five times the S&P 500 average dividend yield of 1.4%.

Moreover, the payout has remained steady since Lumen cut it from $2.16 per share in early 2019. While the company does not guarantee regular dividends, the fact that it can afford to pay the dividend while reducing debt makes a payout reduction less likely.

The prospects for a rising stock price appear uncertain in the near term, as Lumen will have to figure out a way to grow revenue. Nonetheless, it has pivoted to serve today's tech world and has generated enough free cash flow to keep its payout. For these reasons, it likely will remain an appealing choice for income-oriented investors.