FTSE 100 stocks are rallying! 3 cheap dividend shares I’d buy right now

many FTSE 100 stocks are now rising as worries about a potential banking crisis recede. The UK’s main share index is now set to have its best trading day so far in 2023.

The FTSE index is now up 1.7% at 7,530 points. But many blue-chip companies continue to trade at meat discounts to levels recorded just a week ago.

This gives value stock lovers like me a chance to nip in and pick up a bargain or two.

The benefits of buying a dip

Of course market confidence remains very fragile. News of fresh banking sector stress could easily send the FTSE 100 back on course.

But I believe that dips like we have seen in the last week should not be ignored. During periods of investor nervousness, very large stocks are sold along with more vulnerable stocks. So, individuals can buy these selling companies.

It can be easy for new investors to get swept up in panic selling. We’ve all been there. This is where taking a long-term view of things becomes important.

Quality stocks that are oversold during periods of market volatility often bounce back. This can supercharge a share pickers’ last return if they are brave enough to buy during the dips.

3 FTSE 100 stocks on my radar

With this in mind, here are three of the best FTSE 100 deals I’d like to buy for my own portfolio.

The Vodafone Group

Telecommunications titan The Vodafone Group looks set to evolve as the digital revolution clicks through the gears.

I understand that the big investment in 5G and broadband can reduce the amount of cash we have to pay for dividends. However, as a potential investor, I find the company’s growth strategy fascinating. It can help Vodafone stay ahead of the competition and generate top results for the next decade.

Today Vodafone shares trade with a forward price-to-earnings growth (PEG) ratio of 0.9. They also sport a chunky 8.5% dividend yield.

Rio Tinto

I’m considering adding it to my existing account Rio Tinto ownership after recent weakness. The mega miner trades at a forward price-to-earnings (P/E) ratio of 9.2 times and yields 6.8%.

Well, demand for core commodities like iron ore and copper remains uncertain in 2023. The ongoing Covid-19 crisis in China means raw material consumption there is likely to remain weak.

But from a long-term perspective I expect profits to increase. Themes like the green energy transition and rising urbanization should drive sales for the metal. The electric car boom can only take Rio’s earnings to the next level, as illustrated in the chart below.

Aviva

Financial services business Aviva also has brilliant earning potential as the UK’s aging population grows. I expect sales of pensions, annuities, care plans, and other retirement products to experience strong and sustained growth.

At the bottom, FTSE companies operate in competitive industries. But I believe the tremendous power of the brand limits the risks it can take to profit.

Aviva’s share price currently yields an 8% dividend and a P/E ratio of less than 8.1 times.