Dividend stocks that trade at cheap valuations can give investors multiple ways to profit from them. In addition to dividend income, you're also potentially setting yourself up for the possibility of profiting from a higher price in the future -- assuming, of course, the business does well. Heading into 2024, there are many good deals for dividend stocks, as many investors were focused on growth stocks this past year.

One underrated dividend stock investors may want to consider investing in is Takeda Pharmaceutical (TAK 0.74%). The Japanese pharma company pays a dividend that yields 4.2% -- close to three times higher than the S&P 500 average of 1.5%. Here's a closer look at why this might be a good income stock to buy right now.

The business could be a stable one to invest in

Takeda Pharmaceutical is one of the top drug companies in the world. Its portfolio contains a broad mix of products in multiple segments, including gastrointestinal and inflammation, neuroscience, oncology, rare genetics and hematology, and vaccines. Its top-selling product, Entyvio, treats Crohn's disease and ulcerative colitis. It generated revenue totaling 391.7 billion Japanese yen ($2.7 billion) over the past six months (up until the end of September) and grew at a rate of 5.8% year over year.

But the company hasn't been a growth machine by any stretch. The positive is that its performance has at least been relatively stable over the past few years.

TAK Revenue (Quarterly YoY Growth) Chart

TAK Revenue (Quarterly YoY Growth) data by YCharts

For dividend investors, having a broad business that keeps chugging along can be very valuable, as it can provide some much-needed consistency.

The dividend isn't in danger

Another important thing to know about the dividend is that it isn't at risk. Often, with high-yielding dividend stocks, investors may want some assurance and confidence that the dividend is sustainable. In Takeda's case, it is.

Through the first half of fiscal 2023 (Takeda's fiscal year ends in March), the company has generated 291.3 billion yen ($2 billion) from its day-to-day operating activities. And with dividend payments costing the company just under 140 billion yen ($980 million) and its plant, property, and equipment purchases being less than 84 billion yen ($590 million), there's ample room for the company to continue making recurring payments.

There's also still room for the business to pay down its debt, which was a concern for risk-averse investors. But that has also been improving, and Takeda's debt-to-equity ratio is coming down.

TAK Debt to Equity Ratio Chart

TAK Debt to Equity Ratio data by YCharts

Takeda's valuation is attractive

Share prices of Takeda are down 11% this year, and the stock trades near its 52-week low. There are multiple valuation metrics that highlight the stock's low value. The healthcare stock is trading below its book value, at a price-to-book multiple of less than 0.9. Its forward price-to-earnings (P/E) multiple of less than 12 is also fairly low -- the average healthcare stock trades at a multiple of 20.

Forward P/E can sometimes be a better measure than trailing P/E, which one bad quarter can negatively affect. Forward P/E tells investors what the valuation will be based on analyst projections -- which won't include unexpected one-time expenses. Thus, it can be indicative of its valuation based on a typical year for the business. In Takeda's case, the company reported an impairment charge related to certain products last quarter that resulted in a loss, which is why the stock may look expensive with a trailing P/E of 32.

But overall, there's some good value for the stock, as it definitely looks cheap right now. With a consensus analyst price target of nearly $14 from Wall Street, shares of Takeda could rise by more than 50% in the short term.

Is Takeda Pharmaceutical stock a good option for your portfolio?

Takeda Pharmaceutical can be a good dividend stock to own, especially if you want some exposure to foreign stocks in an effort to diversify. Its yield is above average, and the dividend does appear to be safe. The one underwhelming feature of the stock is that with minimal growth, it hasn't made for a great overall investment -- shares of Takeda are down 13% over the past five years.

If you're looking for a stock to buy and hold for the long term, Takeda could be an excellent option, and given its low valuation, its shares may eventually recover. With a broad and diverse product mix, it can make for a solid healthcare investment to hang on to.