Undervalued dividend stocks such as Tassal Group and Australian Pharmaceutical Industries can help diversify the constant stream of cash flows generated by your portfolio through both steady dividend income and expected capital gains over time. If you’re a buy and hold investor, these undervalued dividend stocks can generously contribute to your portfolio value.

Tassal Group Limited (ASX:TGR)

Tassal Group Limited, together with its subsidiaries, engages in hatching, farming, processing, marketing, and selling Atlantic salmon in Australia. Tassal Group was founded in 1986 and with the company’s market capitalisation at AUD A$627.26M, we can put it in the small-cap stocks category.

Tassal Group has been paying dividend over the past 10 years. It currently paid an annual dividend of AU$0.16, resulting in a dividend yield of 4.42%. TGR’s dividend per share have been growing over the past 10 years, with a payout ratio of 44.09%, indicating earnings are able to cover the payments. Furthermore, TGR’s dividend yield exceed Australia’s low risk savings rate which currently sits at 2.48%. TGR is trading beneath its true value by 40.54%, meaning TGR can be bought at an attractive price right now. More on Tassal Group here.

Australian Pharmaceutical Industries Limited (ASX:API)

Australian Pharmaceutical Industries Limited engages in the wholesale distribution of pharmaceutical, medical, health, beauty, and lifestyle products to pharmacies. Australian Pharmaceutical Industries was established in 1910 and with the stock’s market cap sitting at AUD A$716.48M, it comes under the small-cap category.

Australian Pharmaceutical Industries has been paying dividend over the past 10 years. It currently paid an annual dividend of AU$0.07, resulting in a dividend yield of 4.81%. API’s dividend per share have been growing over the past 10 years, with a payout ratio of 65.46%, indicating earnings are able to cover the payments. Furthermore, API’s dividend yield exceed Australia’s low risk savings rate which currently sits at 2.48%. API is also trading below its intrinsic value by 29.30%, meaning that now is a good time to buy API at a good price. More detail on Australian Pharmaceutical Industries here.

Sandfire Resources NL (ASX:SFR)

Sandfire Resources NL engages in the exploration and evaluation of the mineral tenements in Australia and internationally. Sandfire Resources is run by CEO Karl Simich. With the stock’s market cap sitting at AUD A$1.22B, it comes under the small-cap group

Over the past 4 years, Sandfire Resources has been distributing dividends back to its shareholders, with a recent yield of 2.72%. At the current payout ratio of 32.57%, SFR’s yield exceeds Australia’s low risk savings rate of 2.48%. Analysts forecast future payout ratio to be 28.49%, indicating that SFR’s upcoming dividend payments are well-covered by earnings. In addition to this, SFR is also trading beneath its true value by 61.61%, which means SFR is currently an attractive buy for those looking for dividend and capital gains. Interested in Sandfire Resources? Find out more here.