In 2023, stock market uncertainties will worsen, rewarding investors who seek cheap dividend stocks.

The bigger their discount to their fair value, the more margin of safety the company offers. Companies that pay dividends prioritize cash flow first. Management will allocate cash flow to shareholders, rewarding them with a high dividend yield.

Finding cheap dividend stocks is critical for another reason. By the time the Federal Reserve meets for the second time in 2023, the central bank will set a Fed Funds rate of over 5%, that 5% still trails real borrowing costs.

For example, mortgage rates and loans to small businesses will exceed 6%. In addition, the consumer price index, which measures inflation, is 7.1% year over year. Despite negative real returns, investors should expect the Federal Reserve will achieve a long-term inflation rate of 2%.

Investors have these seven ridiculously cheap dividend stocks to consider.

Bank of Nova Scotia (BNS)

Bank of Nova Scotia (NYSE:BNS) stock fell after the company posted higher provisions for credit losses. The bank booked PCL of CA $529 million, up from CA $168 million last year.

Scotiabank regularly stress tests its portfolio. It builds multiple stress scenarios for economic factors like unemployment. Investors should not expect the bank to raise its loss estimates in the near term, but it’s still one of the best cheap dividend stocks to buy now.

The company is investing in technology and analytics to increase its efficiency. It is focused on its existing clients to sustain its business growth.

In the mortgage sector, Scotiabank noted that its average customer has higher FICO scores. This is a scoring system that lenders use to measure credit risk.

Beyond one year, investors should forecast interest rates falling. The Bank of Nova Scotia will benefit when rates fall. Its balance sheet is structured to take advantage of asset repricing.

British American Tobacco (BTI)

British American Tobacco (NYSE:BTI) boosted investor confidence when it announced its revenue growth for FY 2022. BTI expects revenue will grow by between 2% to 4%.

Chief Executive Officer Jack Bowles said that its transformation is accelerating. Its businesses are driving strong volume, revenue and market share growth.

By 2025, BTI will post revenue of $6.07 billion. The company is benefiting from price tiers across its portfolio of brands. It enjoys resilient volume demand globally. This includes Europe and the Middle East.

BTI stock should continue its uptrend as dividend payouts increase in the coming years. The company has a history of posting strong operating cash conversion.

In the U.S., demand trends should rebound. Previously, the post-Covid environment hurt demand. Thanks to its growing premium share and robust brand, British American will post profit growth in this country and remain one of the best cheap dividend stocks out there.

Ford Motor (F)

Ford Motor (NYSE:F) is pinning its growth aspirations on its electric vehicles. Ford has increased the price of the F-150 Lightning. The base price is now more than $15,000 above the original pricing.

Ford wants to encourage customers to consider the higher-end Lightning. It did not raise the prices of the higher trims. The company faces higher supply costs. It needs to pass the inflation-driven cost increases to customers.

Shareholders, who get paid a dividend that yields 5%, can bet that demand will not change from its target customers. As inflationary pressures recede in the coming months, the Fed will stop raising interest rates.

Perceptions of an interest rate drop will drive automobile demand higher. The abrupt drop in F stock creates a rare chance for value investors to get shares at a discount.

Ford positioned its product line-up to embrace the widespread adoption of EVs. This should lift long-term profitability and its share price.

Intel (INTC)

Investors are dumping shares of Intel (NASDAQ:INTC) out of fear. This is misguided. The semiconductor of PC processors has an attractive product line-up.

Last year, it released Alder Lake CPUs, offering customers good prices for high performance. More recently, Intel updated the chip with Raptor Lake for even more performance gains.

Intel has a clear product line-up through 2024. Emerald Rapids will handle every workload type. In 2024, it will release Sierra Forest, a power-efficient product. On the data center side, Intel will end its market share loss.

The company has two major products on the way. In its network business, it will gain market share. In the graphics business, Intel entered the market with a discrete card. It does not need a high-end GPU. It only needs an affordable, mainstream card that customers want.

Intel is lowering its expenses. Its operating expense will fall from $22 billion to around $20 billion in 2023. As revenue stabilizes and costs fall, investors will find INTC stock attractive.

LyondellBasell Industries (LYB)

LyondellBasell Industries (NYSE:LYB) is a specialty chemicals firm. Its acquisitions and its joint venture in China are positive catalysts for growth.

LyondellBasell will improve the competitiveness of its assets in Europe. It has the flexibility to consume energy at more attractive price levels. In addition, it will find energy sources that use less CO2. In the year-to-date period, energy costs in Europe are $1.8 billion higher compared to 2020.

The increasing risks of a recession in 2023 will require the company to increase its revenue in countries on the rebound. For example, China normally imports 40% of its needs in polyethylene. Once the country manages through the Covid pandemic, expect LyondellBasell to report better sales in China.

Medifast (MED)

Medifast (NYSE:MED) is a nutrition and weight loss company. The company announced a quarterly cash dividend of $1.64 a share on Dec. 8, 2022.

In the third quarter, Medifast posted revenue of $390.4 million on non-GAAP EPS of $3.32 a share. It expects revenue of up to $1.59 billion for the year. Markets took the lowered revenue and EPS guidance in stride. MED stock is trading in a $112 – $118 range.

The client retention disruption is a temporary headwind. Medifast said it surveyed those customers who left. They cited inflation and uncertainty around the economic future as reasons for leaving.

The company has many new programs in place and is implementing more. The company will optimize its compensation plan with coaches. As coaches acquire more clients, everyone will benefit.

Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance (NASDAQ:WBA) is the second-largest pharmacy store chain. To do its part in minimizing the spread of the flu and Covid, it is offering testing at over 5,000 pharmacies. The offer should drive more foot traffic, helping to increase same-store sales.

Last year, Walgreens invested $5.2 billion in VillageMD to deliver primary care. It will connect the unit with CareCentrix, an in-home care business. This enhances the customer experience. It gives them control over their health, encouraging customers to utilize all of Walgreen Boots health care services.

The drug store has 200 colocated facilities. By 2025 to 2026, it will have around 600. The asset-light model will lead to higher operating margins. The Telehealth service, which includes a virtual pharmacy, will set Walgreens apart from other drugstore firms.

To increase shareholder value and strengthen its balance sheet, Walgreens Boots raised $1.0 billion. AmerisourceBergen (NYSE:ABC) bought its shares. It may use the proceeds to pay down its debt.

On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.