Source: Flickr user Torbakhopper.

Dividend stocks are the cornerstone of many well-run retirement portfolios. This is because dividends act as a beacon to investors, inviting them to take a deeper look into a company whose business model is so sound it can pay out a percentage of its annual profit to shareholders.

Dividends can also provide a downside hedge in volatile and bear markets. Investors in dividend stocks tend to be oriented more toward the long term, which usually makes for less day trading and less volatility. Lastly, dividends can be reinvested, giving buyers an opportunity to compound gains over the long run. These payouts can mean the difference between simply retiring and living out your dream retirement.

With that in mind, let's look at three cheap dividend stocks you should consider buying right now.

Capital One Financial (NYSE:COF)
With the U.S. economy running on all cylinders, investors can consider turning to sectors that benefit in cyclically positive environments, such as banking. One cheap dividend stock that's regularly crossed my own radar is credit card lender and banking giant Capital One Financial.

Source: Flickr user Wimena Kane.

Like most banks, Capital One Financial is dependent on the health and growth of the U.S. economy. Because it derives such a large percentage of its revenue from its credit cards (interest and fees), it can be hit especially hard when recessions materialize and its delinquency and charge-off rates rise. In other words, investors should expect Capital One to deliver potentially superior margins in bull markets, but be prepared for a subpar performance, even potentially to its peers, in a recession.

Since we're in a growing and bullish economy, what's most appealing about Capital One Financial is its high net interest margin and tight cost controls. In its fourth-quarter earnings results released in January, Capital One noted a 12 basis point increase in its net interest margin to 6.81%. Comparably, some of the nation's largest banks have net interest margins around half of what Capital One delivered in Q4. Furthermore, for the full year, Capital One witnessed a 1% decline in non-interest expenses. Tight cost controls and superior margins are often a good recipe for stock growth in the banking sector.

Another key point to note, as was examined in December by, is that Capital One Financial ranked first among big banks when it comes to customer satisfaction with its mobile banking app. Specifically, users pointed out the ease and security of Capital One's SureSwipe feature, which allows customers to log into their account via mobile app by retracing a pattern based on dots. It throws out the window the need to remember some awful alpha-numeric password that gets changed 15 times a year because you can't remember what it was! Capital One's push into mobile could allow it to forge a strong attachment to young adults, which may be beneficial to Capital One as these young adults land better jobs and make more money in the years to come.

On the heels of a recently approved dividend increase to $0.40/quarter from $0.30/quarter, its $3.125 billion share buyback authorization, a forward P/E of just 10, and its growing dividend yield of 2%, I'd proclaim this to be one cheap dividend stock.

Medtronic (NYSE:MDT)
If you want a great dividend stock in the healthcare industry, perhaps it's time you took a longer look at medical device giant Medtronic.

Source: Flickr user Steve Winton.

Like Capital One, and all stocks for that matter, Medtronic has challenges it needs to overcome. Highest on that list could be the evolution of healthcare reform and the commoditization of medical devices. As the Affordable Care Act, the official name for Obamacare, is implemented, hospitals and consumers have been cautious regarding their spending habits. Putting off elective or even needed surgeries is bad news for a company like Medtronic, which relies on procedural growth to drive its bottom line in the United States.

But there's plenty to like as well. Even though Obamacare might be hindering Medtronic's growth, over the long run, as the rate of uninsured drops and consumers become more acclimated to the costs of paying for health insurance, it will likely be a boon for medical device makers like Medtronic. Easier access to physicians should lead to more preventative procedures being performed.

MiniMed 530G. Source: Medtronic.

Another key point is that Medtronic is a leader in medical device innovation. For example, in 2013, Medtronic introduced the MiniMed 530G, which is the first artificial pancreas device system designed to be a continuous insulin pump. The pump uses sensors to measure blood glucose levels and shuts off when they hit a preset limit to avoid hypoglycemia. More recently, Medtronic launched the MiniMed 640G overseas. This new model comes with a full-color screen and is waterproof for 24 hours in up to 3.6 meters of water.

Third, Medtronic is focusing its efforts on faster-growing emerging markets and recently relocated its headquarters to Ireland on the heels of its Covidien purchase. The move subjects Medtronic to significantly lower corporate taxes in Ireland and should allow more of its revenue to flow through to its bottom line.

Lastly, Medtronic is also generous with its shareholders. The company is one of just over four dozen Dividend Aristocrats (i.e., companies that have raised their annual dividend payout for a minimum of 25 straight years), having raised its dividend for 37 straight years. With a commitment from management to return approximately 50% of its free cash flow to shareholders, and a 1.6% current yield, Medtronic looks like a potentially good bet for income investors.

Juniper Networks (NYSE:JNPR)
Lastly, I'd urge dividend seekers to consider taking a closer look at Juniper Networks in the technology sector if you're on the lookout for a cheap dividend stock.

Juniper's two biggest drawbacks are that it's reliant on U.S. growth to drive its bottom line (in other words, it's cyclical), and that it's in the same industry as networking equipment juggernaut Cisco Systems. Juniper has discovered that battling Goliath isn't as easy as it might appear.

Source: Juniper Networks, Facebook.

Despite these challenges, there are still a couple of reasons to really be intrigued by Juniper Networks.

Juniper's two largest areas of opportunity are in the cloud, and with wireless infrastructure build-outs via 4G LTE networks. As businesses expand from static PCs into data centers capable of sharing information across a number of devices instantly, including outside the confines of the offices, servers, routers, and other connectivity equipment will be called upon to meet this rising demand for rapid information transfers. It's my belief that Juniper will be one of those beneficiaries, even if it is taking a back seat to Cisco. There's more than enough room in the data center market for a number of players, leaving Juniper with what I suspect could be a high single-digit, or even a low double-digit growth opportunity throughout the remainder of the decade.

Wireless infrastructure has these same needs as AT&T continues to spend heavily on its 4G LTE network in order to catch up to Verizon Wireless. Juniper's routing and cloud solutions could be the ticket to substantial growth in AT&T's next-generation network rollout.

Juniper is also valued cheaply relative to the overall market. A forward P/E of just 13, $620 million in net cash, and a PEG ratio of 1.3 all point to an inexpensive stock. Tack on a 1.7% yield, and you have all the makings of a cheap dividend stock worthy of a deeper dive.