Dividend stocks are a safe bet to increase your portfolio value as they provide both steady income and cushion against market risks. However, undervalued dividend stocks also enhances your opportunity to gain from capital appreciation (an increase in share price) over time as well. If you’re a long term investor, these cheap dividend stocks can boost your portfolio value.

Xenith IP Group Limited (ASX:XIP)

Xenith IP Group Limited provides intellectual property (IP) services and advice relating to the identification, registration, management, commercialization, and enforcement of IP rights in Australia, New Zealand, and internationally. Started in 1859, and currently run by Craig Dower, the company employs 100 people and with the company’s market cap sitting at AUD A$100.25M, it falls under the small-cap stocks category.

Over the past 2 years, Xenith IP Group has been distributing dividends back to its shareholders, with a recent yield of 4.43%. XIP’s upcoming dividend are appropriated covered by its profits over the next three years, according to industry analysts, with a forecasted payout ratio of 72.45%. At the current payout ratio of 75.93%, XIP’s yield surpasses Australia’s low-risk savings rate of 3.00%. XIP is trading below its intrinsic value by 42.00%, which makes for an attractive investment. Dig deeper into Xenith IP Group here.

Collection House Limited (ASX:CLH)

Collection House Limited provides debt collection and receivables management services in Australia and New Zealand. Formed in 1992, and now run by Anthony Rivas, the company employs 821 people and has a market cap of AUD A$180.18M, putting it in the small-cap category.

Collection House has been paying dividend over the past 10 years. It currently paid an annual dividend of AU$0.078, resulting in a dividend yield of 5.87%. Its dividend yield exceeds the top dividend-paying companies in Australia, with the average dividend yield of 4.92%. Furthermore, its dividend payment has been increasing over time, and analysts expect future earnings to cover this payout moving forward. CLH is also undervalued by 84.74%, meaning CLH can potentially bring about strong capital gains through mispricing. Dig deeper into Collection House here.

The Reject Shop Limited (ASX:TRS)

The Reject Shop Limited operates in the discount variety retail sector in Australia. Established in 1981, and run by CEO Ross Sudano, the company currently employs 5,430 people and has a market cap of AUD A$203.17M, putting it in the small-cap group.

Over the past 10 years, Reject Shop has been distributing dividends back to its shareholders, with a recent yield of 6.82%. Its dividend yield exceeds the top dividend-paying companies in Australia, with the average dividend yield of 4.92%. Furthermore, its dividend payment has been increasing over time, and analysts expect future earnings to cover this payout moving forward. TRS is trading below its intrinsic value by 51.66%, which means TRS is currently an attractive buy for those looking for dividend and capital gains. Dig deeper into Reject Shop here.