These fast-growing dividend stocks have significant upside, once their value adjusts higher to match their intrinsic value. Each of these stocks has a high yield of at least 4% and low price-to-earnings (P/E) multiples.

Moreover, on top of this, each of the companies has good earnings growth, which ensures that the dividends can keep growing.

These factors make these stocks highly defensive and poised to move higher, especially since their secure dividends provide huge upside. This is one of the chief benefits of stocks over fixed-coupon bonds — their dividends can rise over the long term.

As a result, investors in fast-growing dividend stocks have the ability to fight inflation over time, as opposed to bonds. They are at the mercy of the ravages of inflation.

Let’s dive in and look at these dividend stocks further:

MO	Altria	$53.98
XRX	Xerox Holdings	$18.90
T	AT&T	$20.90
IBM	International Business Machines	$142.60
LYB	LyondellBasell Industries	$109.87
CNQ	Canadian Natural Resources Limited	$66.54

Altria Group (MO)

Market Cap: $97 billion
Dividend Yield: 6.7%

Altria (NYSE:MO) delivered non-GAAP first-quarter earnings per share (EPS) growth of 4.7% on a year-over-year (YoY) basis. The tobacco company said it expects to deliver full-year EPS of between $4.79 yo $4.93 per share.

So, at $53.98, as of June 7, this puts the stock on a 2022 multiple of just 11x. Analysts forecast 2023 EPS of $5.13, putting the stock on a forward P/E multiple of 10.5x.

More importantly, though, Altria pays a healthy dividend of 90 cents per quarter. That gives it an annual yield of 6.7%. But it is highly likely that Altria will raise the dividend now that it has paid the 90-cent dividend per share (DPS) for the past four quarters.

It seems to raise the DPS by 4 cents per quarter. So if the DPS rises to 94 cents, or $3.76 annually, that would raise the dividend yield to almost 7%. That will make this one of the best dividend stocks and highly attractive to value investors.

The company said in its press release that it pays out 80% of its earnings, so next year that means the DPS could rise even further — to $3.944. That would raise its yield at today’s price to 7.3%. Another way to look at it is this way. Assuming the dividend yield stays at 6.7%, the $3.944 dividend implies a target price of $58.95 (i.e., $3.944/0.0669), or 9.2% higher than today.

On top of this Altria bought back $576 million of its own shares last quarter. That implies $2.3 billion annually, or over 2% of its market value. That works to increase the value of Altria stock even more.

Xerox Holdings (XRX)

Market Cap: $2.9 billion
Dividend Yield: 5.2%

Xerox Holdings (NASDAQ:XRX) calls itself a document management company now. Recently the company reported lower revenue and earnings during Q1. However, it is still very profitable. For example, its gross margin is 31.8%, and it generated $50 million in free cash flow (FCF).

Moreover, analysts forecast earnings per share (EPS) will rise 86% to $2.12 by the end of 2023. This puts the stock on a cheap forward P/E of 8.9x. Moreover, the dividend is just $1, so the stock has an affordable 5.2% dividend yield going forward.

On top of this, the company has a policy of returning 50% of its free cash flow (FCF) to shareholders. It expects to produce at least $400 million in FCF this year.

So, if it returns $200 million in dividends and share repurchases, the total yield to investors will be 6.7%. This makes it one of the best dividend stocks.

AT&T (T)

Market Cap: $151.7 billion
Dividend Yield: 5.3%

AT&T (NYSE:T) recently spun off Warner Media and merged it with Discovery to form Warner Bros Discovery (NASDAQ:WBD). As a result, AT&T now pays out 40% of its free cash flow and set its initial post-spin-off dividend at $1.11 per share. At today’s price that gives it a 5.3% dividend yield.

However, as AT&T’s FCF rises over the next several years, investors can expect to see its dividend increase as well. So far, analysts are not yet projecting higher revenue or earnings in 2023.

But, on the other hand, the $1.11 dividend represents just 40% of the $2.54 EPS forecasts for next year. So far, then, the dividend is not out of line with the company’s stated payout ratio goals. As a result, once the U.S. economy starts to rebound, the higher earnings could lift the dividend payments.

In the meantime, investors are getting paid a nice yield to wait until AT&T stock rises further with higher earnings.

International Business Machines (IBM)

Market Cap: $126 billion
Dividend Yield: 4.7%

International Business Machines (NYSE:IBM) recently raised its quarterly dividend by 1 cent to $1.65, or $6.60 annually. This gives the stock an ample yield of 4.7%.

Moreover, the dividend is only 67% of the $9.79 EPS for this year, and 61.9% of the $10.66 forecast for next year. This also means that IBM is very cheap, at $142.60 at the open on June 7, putting it on a forward 2023 P/E multiple of just 13.4x. Given the 9% earnings growth forecast for 2023, despite the prospects of a recession, this is a very cheap multiple.

The bottom line is that IBM is slowly making a good transition not only as a software company but also to a cloud-based platform as well.

LyondellBasell Industries (LYB)

Market Cap: $37 billion
Dividend Yield: 4.3%

LyondellBasell Industries (NYSE:LYB) is a chemical company that trades on a 6.68x forward P/E ratio, has stable earnings and features a 4.3% yield. This is a little risky though, and investors should be aware that the chemical industry could take a big hit if there is a recession.

Nevertheless, my view is that most of this risk is already “in” the stock price. That is why it is so cheap now. Moreover, even if the earnings fall going forward, that might just mean the P/E will rise, assuming the stock stays the same. In other words, investors already seem to be discounting much of the bad news.

Moreover, the annual $4.76 dividend represents just 29% of the company’s forecast $16.44 EPS for 2022, and just 29.1% of the $16.35 forecast for 2023. In other words, its payout ratio is so low, it is not likely the dividend will be cut, even if the recession turns out worse than expected.

Canadian Natural Resources (CNQ)

Market Cap: $78 billion
Dividend Yield: 3.5%

The last of our dividend stocks, Canadian Natural Resources Limited (NYSE:CNQ), is a Calgary-based oil and gas company that is cheap, with a 9x forward multiple and a 3.5% dividend yield. This is based on a dividend payment of $2.32 annually, using a recurring 58 cents quarterly dividend.

However, CNQ pays out a variable amount each quarter. This introduces an element of risk to the dividend payment. However, if oil and gas prices keep on rising, you can assume that the dividend will keep stable or even rise accordingly.

Most non-U.S. companies pay out dividends based on a stable payout ratio, even if that means the dividend payment jumps around each quarter. U.S. companies do the opposite. They like to keep dividends stable, leaving the payout ratio to bounce around. This introduces a degree of risk to this stock.

However, that already seems to be discounted into the stock price, given how cheap it is now.

On the date of publication, Mark Hake did not hold (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.