Dividend stocks that are trading at modest valuations can make for excellent long-term investments. Not only can you collect a recurring dividend, but if the stock is cheap, you can also position yourself for the possibility of profiting from an increase in the stock's price in the future. A couple of cheap dividend stocks to consider today are CVS Health (CVS 1.19%) and Anheuser-Busch InBev (BUD -0.44%).

1. CVS Health

Healthcare company CVS Health is currently trading near its 52-week low. Over the past 12 months, the stock has fallen 28%, performing much worse than the S&P 500, which has declined by only 7% over the same stretch.

CVS hasn't been performing poorly, but the company's focus on acquisitions may have investors concerned about its strategy and what it may mean for its dividend. CVS has been spending billions to invest in home health company Signify Health and primary care operator Oak Street Health

The company's payout ratio is around 70%, and so the concern may be that incorporating a company such as Oak Street, which incurred a net loss of just under $510 million last year, could affect CVS' ability to pay dividends in the future.

It's a valid concern, but from a cash flow perspective, the dividend should be fine. CVS generated $13.5 billion in free cash flow in 2022, and only about one-fifth of that ($2.9 billion) was needed for its dividend payment.

Chart showing CVS's annual free cash flow down since 2022.

CVS Free Cash Flow (Annual) data by YCharts

The company is in a strong enough financial position that it can pursue acquisitions and still pay its dividend, which today yields 3.2%. In the long run, getting deeper into healthcare should help CVS generate even stronger results, which could even enable it to afford to pay more in dividends -- it has raised its payouts in just two of the past six years.

Trading at a forward price-to-earnings (P/E) multiple of nine, which is based on analyst expectations, CVS is a bargain buy. The average healthcare stock trades at 18 times its future profits.

2. Anheuser-Busch InBev

Beermaker Anheuser-Busch InBev isn't trading near its low, but it's still a stock that can make for a good value buy. Its forward P/E multiple is just over 19, which is in line with the S&P 500 average. And in terms of its trailing P/E, at a multiple of 21, that's also modest compared to where the stock was before the bear market hit:

Chart showing Anheuser-Busch InBev's PE ratio down in late 2022 and early 2023.

BUD PE Ratio data by YCharts

The company's strong and diverse business, which features brands such as Budweiser and Stella Artois, should command more of a premium. Beer is also a fairly stable business to invest in, with Anheuser-Busch enjoying above-average revenue growth in recent quarters:

Chart showing Anheuser-Busch InBev's quarterly YoY revenue growth up sharply in 2020, then down since mid-2021.

BUD Revenue (Quarterly YoY Growth) data by YCharts

The company's dividend yield of 1.2% is modest. But when combined with its modest valuation, Anheuser-Busch InBev can make an excellent income-generating investment to hold on to. Last year, its free cash flow totaled $8.1 billion, which was more than three times the $2.4 billion it paid out in dividends. With the company's payout ratio at only 19%, investors won't need to worry about the safety of its dividend payments.