The year 2022 has been challenging for many investors. Making money seems complicated when inflation is high, and returns in several asset classes remain negative. However, investing in undervalued dividend stocks with high yields is an effective way to combat the current bear market. As a result, many investors have shifted their focus towards blue-chip stocks.

For now, the healthy dividend yield in these stocks ensure regular cash flow for investors. With a strong balance sheet and healthy operating cash flows, dividends are sustainable even if the industry faces near-term headwinds.

Furthermore, as overall market conditions improve, these undervalued dividend stocks are poised for a meaningful rally. Investors are therefore positioned to benefit from dividend and capital gains in these fundamentally strong stocks.

While it’s an excellent time to accumulate undervalued growth stocks, I would remain overweight on blue-chip dividend stocks. It’s a bonus if these stocks are available at a valuation gap.

Let’s talk about four undervalued dividend stocks with yields over 5%.

AT&T (T)

AT&T (NYSE:T) stock has underperformed after the spinoff of the media division. However, T stock still looks attractive at a forward price-earnings ratio of 6.3x and a dividend yield of 6.9%.

Even as T stock trends lower, business developments have been positive. The company’s 5G network already reaches 281 million people nationwide. With a capital investment of $135 billion over the last five years, the company is well positioned for sustained subscriber growth.

AT&T has also improved its credit profile. With the media division spinoff, the company used $40 billion in proceeds for debt reduction. Moreover, in Q2 of the current year, AT&T has guided for a free cash flow of $14 billion. This will support dividends and help in further deleveraging.

Therefore, the correction is a good opportunity to accumulate some AT&T stock. I believe T stock could double in the next 24-36 months, and a healthy dividend payout adds to the positive.

Newmont Corporation (NEM)

With aggressive rate hikes, gold has witnessed a meaningful correction. Newmont Corporation (NYSE:NEM) stock has declined by 45% in the last six months, and the correction seems overdone. NEM stock currently trades at a forward P/E of 16.3x, and its dividend yield of 5.4% looks very attractive.

In my opinion, the correction in precious metals might be overdone. Due to geopolitical tensions, sustained inflation, and the possibility of a recession, gold will likely increase in value.

Newmont has robust gold reserves of 96 million and 114 million ounces in gold resources. These reserves are likely to ensure stable production in the coming years.

Moreover, Newmont reported a total liquidity buffer of $7.3 billion as of Q2 2022. With a net-debt-to-adjusted EBITDA of 0.3x, the credit profile is vital. Even with lower gold prices, I expect the company to hold on to its investment grade rating.

BHP Group (BHP)

BHP Group (NYSE:BHP) is another name among undervalued stocks with a yield of over 5%. BHP stock currently trades at a forward P/E of 8.4x and offers investors a dividend yield of 14.3%.

BHP stock has declined sharply in the recent months with aggressive rate hikes and GDP growth concerns. However, the company delivered solid numbers for FY2022 with an underlying EBITDA of $40.6 billion. For the same period, the EBITDA margin was 65%.

It is also worth noting that BHP expects to increase capital expenditure on commodities that include copper and nickel. These commodities are likely to remain in demand with a focus on clean energy.

The company ended FY2022 with net debt of $300 million and gearing of 0.7%. With a robust financial profile, BHP’s dividends are sustainable. Moreover, significant capital investments will ensure steady EBITDA growth. For FY2023, the company expects to incur a capital expenditure of $7.6 billion. Thus, BHP is also well positioned to navigate any near-term downturn.

Altria Group (MO)

Altria Group (NYSE:MO) is another top pick among undervalued dividend stocks. The stock trades at a forward P/E of 8.4x and offers a dividend yield of 9.0%. Moreover, the company recently raised its quarterly dividend by 4.4% to 94 cents.

Of course, there is no doubt that Altria’s valuation has been impacted by regulatory headwinds related to Juul. However, the stock seems to have discounted the worst.

On the positive side, the company’s combustible segment continues to deliver robust cash flows. Even as Altria focuses on the non-combustible segment, cigarette sales will remain the cash flow driver.

It’s also worth noting that the company’s oral tobacco brand has witnessed sustained market share growth in the U.S. Over the next five to ten years, the non-combustible segment will likely be the key growth driver.

Altria also has exposure to the cannabis business through a 45% stake in Cronos (NASDAQ:CRON). The latter has been delivering improved growth numbers. Therefore, once cannabis is legalized at the Federal level in the United States, the segment can create more value.

On the date of publication, Faisal Humayun 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.