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3 cheap FTSE 100 dividend shares I’d buy now

Many FTSE 100 shares have performed well over the last few months. It’s fair to say that there’s a lot less value on offer today than there was in late March when the FTSE 100 was trading below 5,000 points.

That being said, there are still plenty of FTSE 100 shares that trade at very attractive valuations at present. Here’s a look at three cheap dividend-paying FTSE 100 stocks I’d be happy to buy today.

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This FTSE 100 stock looks undervalued

The first cheap FTSE 100 stock I want to highlight is financial services giant Legal & General Group (LSE: LGEN). It currently trades on a forward-looking P/E ratio of just 7.4. At that valuation, I think the stock is significantly undervalued.

Earlier this month, analysts at Bank of America (BofA) Global Research upgraded LGEN to buy from neutral. They slapped a price target of 265p on the stock – 22% higher than the share price today.

BofA’s analysts also commented on LGEN’s bumper dividend yield, which currently stands at over 8%. “We think this is a particularly appealing proposition in a market starved of yield. Further, we think that the regulatory risk to the dividend is low,” they wrote to clients.

I fully agree with the BofA analysts’ view on Legal & General shares. I think the dividend yield here is very attractive. I’d buy this FTSE 100 share today.

Great buying opportunity

Another dividend-paying FTSE 100 share I’d be happy to buy today is Hikma Pharmaceuticals (LSE: HIK). It’s a fast-growing healthcare company that manufactures branded and non-branded generic medicines.

Hikma’s share price has fallen recently, despite the fact that the company issued a very encouraging trading update in April. The reason the shares have dropped? A major shareholder has sold a large amount of stock.

Personally, I think this share price weakness is a great buying opportunity. And I’m not the only one who sees an opportunity right now. Earlier this month, analysts at Morgan Stanley upgraded the stock to ‘overweight’ from ‘equal-weight’ and raised their price target from 2,200p to 2,600p. That price target is around 20% higher than the current share price.

Hikma shares currently trade on a forward-looking P/E ratio of 17.4. I think that’s quite cheap. The dividend yield on offer is about 1.6%.

A FTSE share with a 5% dividend yield

Finally, I also like the look of GlaxoSmithKline (LSE:GSK) right now.

I think GSK is a great stock to own in the current environment. For a start, I like the fact that the FTSE 100 company is one of the largest vaccine manufacturers in the world. This means it could play a key role in the fight against Covid-19. Just recently, the company advised that it was making a $163m investment in German biotech CureVac, to work together on a vaccine for the coronavirus.

Another thing I like about GSK is that it owns a whole portfolio of consumer healthcare brands that includes the likes of Voltaren, Panadol, and Fenbid. These kinds of trusted brands are attractive assets as they tend to generate consistent cash flows. That means GSK has defensive qualities.

GSK shares currently trade on a forward-looking P/E ratio of about 13.4. That’s an attractive valuation, in my view. The stock also offers a prospective dividend yield of about 5.1%. I’d be happy to buy this FTSE 100 champion today.

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Edward Sheldon owns shares in Legal & General Group and GlaxosmithKline. The Motley Fool UK has recommended GlaxoSmithKline and Hikma Pharmaceuticals. 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.