Two cheap dividend stocks I'd buy in April

The FTSE 100 may be trading close to its all-time highs but that doesn't mean there isn't value to be found in the market at present. With that in mind, here's a look at two dividend stocks that, despite rewarding investors handsomely in recent years, appear to be trading cheaply.

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Bellway

Bellway(LSE: BWY) has been a cracking performer recently. Not only has the stock risen an incredible 230% over the last five years, but the housebuilder has been a dividend cash cow for long-term investors, paying out increasing dividends year after year. Indeed, with payouts of 20p, 30p, 52p, 77p and 108p over the last five years, the average yearly dividend growth rate in this time has been an incredible 54%.

At the current share price of 2,685p, buyers of the stock can pick up a yield of 4%, increasing to 4.2% and 4.5% over the next two years, if City analysts' consensus forecasts are accurate. Furthermore, the shares appears to offer outstanding value, trading on a forward-looking P/E ratio of just 7.9.

The caveat here is that housebuilding is an extremely cyclical business, and during periods of economic weakness, profits and dividends can dry up. Just look at Bellway's financial performance in FY2009 - revenue fell by 40% and the company slashed its dividend per share from 24p to 9p.

However recent half-yearly results showed no signs of any Brexit-related slowdown, with the company reporting a 9.3% rise in profit before tax. It said that "the wider economic uncertainty following the EU referendum has not had any meaningful effect on purchasers' willingness to acquire a Bellway property in those parts of the country where the group operates."

As a result, Bellway appears to offer a decent yield with potential further growth at a very reasonable valuation.

International Consolidated Airlines

British Airways owner International Consolidated Airlines(LSE: IAG) has been another outstanding performer in the last five years, with the stock rising an impressive 196%.

The airline operator paid a maiden dividend of EUR0.20 in 2015, and then last year paid out EUR0.24, equating to a yield of 3.9% at the current share price. A similar payout is forecast for this year, before an 8% dividend rise in FY2018, according to consensus estimates.

The shares can be purchased at what appears to be fantastic value, with the forward-looking P/E ratio sitting at a low level of just 7.1. However, like Bellway, the investment thesis is not without risks.

The combination of rising fuel costs, adverse currency movements, a potential Brexit-related slowdown and the ever-present threat of terrorism could hamper profitability going forward. And the airline operator is also likely to face tough competition from the likes of easyJet and Ryanair.

However in February, the company reported a 33% rise in profit before tax for FY2016, and CEO Willie Walsh stated that "we have great confidence in IAG's future prospects and are increasing cash returns to our shareholders."

The company is participating in a share buyback at present, suggesting that management believe the share price is undervalued. And with that in mind, despite the 20% share price rise this year, I believe International Consolidated Airlines offers value for dividend investors at the current price.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.