3 Dirt Cheap Dividend-Paying Value Stocks to Buy Now

Dividend stocks lack the glitz and glam of high-octane growth stocks. But they can make up for it by passing along profits to shareholders no matter what the market is doing. Similarly, value stocks are priced based on their existing profits rather than what they could make in the future. In other words, expectations for future growth aren’t great, and the valuation reflects that sentiment.

Investors looking for dividend-paying stocks at reasonable valuations have come to the right place. Here’s why these three Motley Fool contributors have identified American Electric Power (AEP -1.76%), Owens Corning (OC 3.42%), and ConocoPhillips (COP -1.94%) as top dividend stocks to buy now.

American Electric Power is a passive income powerhouse

Scott Levine (American Electric Power): Shares of American Electric Power may have soared more than 15% since the start of the year, but that doesn’t mean the stock is too pricey for dividend-hungry investors. Providing an enticing forward dividend yield of 3.5%, this electric utility stock — which has paid a dividend every quarter since 1910 — underperformed the S&P 500 last year, and while it’s outperforming the index so far in 2025, it’s still sitting in the bargain bin.

Providing electric service to about 5.6 million customers located in 11 states, AEP maintains a robust network of about 40,000 miles of transmission lines and 225,000 miles of distribution lines, as well as a diverse power generation fleet that includes coal, natural gas, nuclear, and renewable energy assets that total 28 gigawatts of capacity.

Income investors interested in a reliable dividend stock will find American Electric Power especially appealing because the company generates the lion’s share of its earnings — about 95% of earnings per share — from its regulated business. This gives management clear foresight into future cash flows, enabling it to plan accordingly for capital expenditures such as infrastructure upgrades and dividend payments.

From 2025 through 2029, for example, management expects to generate operating cash of $41.5 billion and pay out about $11.1 billion in dividends.

For those who are charged up with the prospects of an investment in this leading electric utility, now’s a great time to initiate a position. Shares of American Electric Power are trading at 8.9 times operating cash flow, a discount to their five-year average of 9.3.

Owens Corning stock could fly if the housing market makes a recovery

Lee Samaha (Owens Corning): Trading at 10 times trailing earnings and 11.3 times trailing free cash flow (FCF), this building materials company is definitely in value stock territory. Moreover, the company returned $638 million of its $1.25 million in FCF to investors through share buybacks and dividends (current yield is 1.7%).

As always, there’s a reason why the market rates Owens Corning low: its exposure to the North American residential housing market. As management noted in the latest earnings release, “The key economic factors that impact the company’s business are residential repair activity, residential remodeling activity, U.S. housing starts, and commercial construction activity.”

It’s no secret that these end markets have been challenging, as market interest rates (which lead mortgage rates) have stayed higher for longer than many anticipated. That said, history suggests that “fighting the Fed” (in the form of the bond market sending market rates in the opposite direction of the Federal Reserve rate) will not pay off over the long term.

On that basis, market conditions will improve for Owens Corning, and the company took advantage of the downturn to buy doors business Masonite for $3.9 billion in 2024 to increase its exposure to the North American residential market. The deal adds doors to Owens Corning’s existing roofing and insulation offerings. In addition, the company is selling its non-core glass fiber reinforcement business for an enterprise value of $755 million as it increasingly pivots to building materials.

Owens Corning’s attractive valuation and potential upside to earnings from an improving housing market make it an exciting stock for dividend-seeking investors who are optimistic about housing.

ConocoPhillips is betting big on its U.S. oil and gas production

Daniel Foelber (ConocoPhillips): ConocoPhillips is the most valuable U.S.-based exploration and production company — with a market cap nearly double second-place EOG Resources. And with 2025 expected production of 2.34 million to 2.38 million barrels of oil equivalent (boe) per day, it is the third-largest U.S. producer behind only ExxonMobil and Chevron.

Its 2023 production mix was roughly half oil and half natural gas, with the continental U.S. (Lower 48 states) making up 58% of production; Canada and Alaska comprising 16% of production; Europe, Middle East, and Africa with 14%; and Asia Pacific contributing 11%.

However, the Lower 48 should make up a higher percentage of overall production in 2025 — which will be the first full year of earnings that includes the added production from the acquisition of Marathon Oil.

In 2025, ConocoPhillips plans to ramp up capital expenditures to the highest level in 10 years. The investment will help develop its existing asset base and fund long-term projects that should boost FCF over time. These projects are expected to start up between 2026 and 2029 and include the company’s massive investment in Qatar’s North Field East and North Field South expansion projects, oil production in Alaska, and its Port Arthur liquefied gas project.

ConocoPhillips is a coiled spring for FCF growth, even at current oil and gas prices. In 2024, West Texas Intermediate (WTI) crude oil averaged $76.63 per barrel. Even in those mid-cycle conditions, ConocoPhillips generated a whopping $8 billion in FCF, or $6.78 in FCF per share compared to dividends paid of $3.12.

The company should continue to generate more FCF over the next five years so long as oil prices don’t fall substantially. But even if they do, ConocoPhillips has a sizable margin of error where it can still turn a profit. Synergies from the Marathon Oil acquisition should bring its FCF breakeven to the low $30 per boe range. Granted, at that level, the energy giant wouldn’t be able to support its dividend with cash. But that cushion is still sizable considering WTI oil prices are currently around $70 per barrel.

With a 3.1% dividend yield, ConocoPhillips stands out as a solid dividend stock to buy for investors who are neutral on the oil and gas industry and are looking to collect passive income from an industry-leading company.