Better, faster, cheaper -- pick two. Engineers sometimes use this axiom in developing new products. Investors might think it applies in a way to dividend stocks as well. The idea is that between a strong dividend yield (better), solid prospects of share price appreciation (faster), and an attractive valuation (cheaper), you'll only find stocks that provide two of the three attributes.
However, that's not necessarily the case. Here are three dirt cheap dividend stocks to buy in March that check off all three boxes.
There's no question that Pfizer (PFE -0.56%) has a great dividend. Its dividend yield currently stands at nearly 3.5%. The company has ample cash flow to continue increasing the dividend in the future.
But is the pharma stock really dirt cheap? Pfizer's shares trade at only 7.5 times expected earnings. That's only a fraction of the S&P 500's forward earnings multiple of 19.7.
Some might question the reliability of only looking out one year considering the uncertainty about Pfizer's COVID-19 vaccine sales after 2022. However, the stock's price-to-earnings-to-growth (PEG) ratio using five-year growth estimates is barely over 1.0, indicative of an especially attractive valuation for a mature company such as Pfizer.
Wall Street thinks that Pfizer also offers solid prospects for share price appreciation. The average analysts' 12-month price target reflects an upside potential of nearly 30%.
And Pfizer's growth prospects could be even better than the company is letting on. Its 2022 guidance projects sales of COVID-19 pill will be $22 billion, but there are several reasons to believe the actual total will be much higher.
2. Verizon Communications
Many income-seeking investors have long held Verizon Communications (VZ 0.39%) in high regard. The telecom giant's dividend yield has topped 4% for most of the 21st century. Verizon's dividend currently yields 4.8%.
Verizon stock is also attractively valued. Its shares trade at under 10 times expected earnings. For investors who prefer valuation metrics based on enterprise value (EV), the stock's EV is less than 8.2 times earnings before interest, taxes, depreciation, and amortization (EBITDA).
What about share price appreciation? Wall Street's consensus 12-month price target for Verizon is nearly 13% above the current share price.
Verizon's longer-term prospects also appear to be strong. Increased adoption of 5G and home internet should provide strong longer-term growth drivers for the telecom stock.
Viatris' (VTRS 0.72%) dividend yields close to 3.4%. The company, which sells generic drugs and biosimilars, has only offered a dividend for less than nine months. However, Viatris has a great history of dividends since it was formed in 2020 through a merger of Pfizer's Upjohn unit and Mylan.
I recently wrote that Viatris was my top value stock to buy right now. It was an easy decision. Shares of the drugmaker trade at only 3.9 times expected earnings and 0.94 times trailing 12-month sales.
Granted, Viatris' stock performance has been dismal. Its shares plunged 28% last year while the overall market delivered strong gains. But Viatris is handily beating the market so far in 2022. Wall Street is also bullish about the stock with a consensus 12-month price target reflecting an upside potential of nearly 40%.
Viatris probably won't generate jaw-dropping returns over the long term. However, the company should be able to provide moderate growth plus solid dividends. And with its dirt cheap valuation and steady business, Viatris could be a safe haven for investors if there's an extended stock market correction.