Wherever I look, I see cheap dividend shares. I don’t mean just high dividends, because they can be the first things to go when times are tough.

No, I mean shares paying decent dividends, but which also look cheap on other valuation measures too.

My latest top picks are not in the FTSE 100, which is where our favourite dividend stocks are usually found. Today, I’m looking at three smaller ones that I think could be dirt-cheap right now.

Real estate health

Target Healthcare REIT (LSE: THRL) shares are down 35% in five years, most of that in the past 12 months.

It’s a real estate investment trust (REIT), and invests in care homes it rents out. And anything to do with the property market is meant to be poison right now.

There’s a 9% dividend yield, which looks attractive on its own. Falling property values have pushed the share price down. But the shares have fallen a lot further than those properties.

Target shares now trading on a massive 29% discount compared to asset values. That’s like buying pound coins for 71p each.

A forecast price-to-earnings (P/E) multiple of 30 for this year is the only real downside I see. That’s perhaps a bit steep. And it could mean further share price weakness.

But the high yield and big discount makes Target look like a cheap income buy to me.

Builders

I mentioned housebuilders. And I can’t search for cheap dividend shares without finding one. It’s Vistry (LSE: VTY), previously known as Bovis Homes.

We’re looking at another big share price drop in late 2022, knocking a third off the value in five years.

Interest rates are high, mortgages are expensive, and people are struggling to afford homes. I don’t deny the business is under pressure, and 2023 certainly looks like a risky year.

So what about basic valuation measures? The dividend yield is above 8%, though forecasts suggest it should drop to around 6%. But the predicted P/E is under nine, which is way lower than the market average.

Whatever happens in 2023, I just see that as cheap for a company with healthy long-term cash and dividend prospects.

Bank

It’s easy to overlook the so-called challenger banks, such as Virgin Money UK (LSE: VMUK). Its shares have been more volatile than the big UK banks. And they dropped sharply in response to the latest banking crisis brewing in the US. Virgin has underperformed over five years, down nearly 60%.

The bank’s small size has got to make it a riskier investment. Its £1.9bn market-cap is tiny compared to, say, Barclays at £22bn.

In any new financial meltdown, banks with less capital and liquidity are surely more likely to go to the wall.

But we see a P/E of under seven here, expected to drop well below five over the next three years. And we have dividend yields reaching 8% over the same period.

There’s risk, but this is another that I rate as cheap.

The post 3 dirt cheap dividend shares to buy today appeared first on The Motley Fool UK.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc. 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.