Top 10 Cheap Dividend Plays

One of the classic financial ratios is the price-to-earnings ratio , or P/E, which is the price of the stock divided by the earnings per share. The lower the P/E, the better.

The average P/E for the Dow Jones Industrial Average is 16.7. If you look at the companies that raised their dividends last week, nine of them had P/E's that were lower than the Dow's P/E. Stockpickr.com has reviewed the stocks that increased their dividends, and compiled the ones with the lowest P/E ratios.

Cincinnati Financial (CINF Quote) sits atop the list with the lowest P/E: 9. Cincinnati Financial is an insurance company that offers commercial and personal property insurance, casualty insurance and life insurance.

It just increased its dividend by 6%, yielding 3.6%. This is the 47th consecutive increase of the dividend. The stock carries a 1.2 P/E-to-growth (PEG) ratio. This Ohio-based company, which currently operates in 33 states, has recently decided to expand to New Mexico.

Cincinnati Financial shows up in the portfolio of the 5-Star Morningstar-rated Allegiant Mid Cap Value I Fund Arvix, which is managed by Michael Santelli. The fund has had an average annual return of 24.25% over the last three years. Allegiant also owns Edison International (EIX Quote), the electric utility that serves central and southern California. Edison has a P/E of 15, a PEG of 1.9 and a yield of 2.2%.

Another stock with a low P/E and an increasing dividend is Parker-Hannifin (PH Quote), which manufactures electromechanical controls and hydraulic-fluid power systems. It just increased its dividend by more than 21%, to 31.5 cents a share. The stock has a P/E ratio of 13.5, a PEG of 1.1 and a yield of 1.1%. It also just announced a $500 million stock repurchase, which is in addition to its existing share-repurchase program. To round out the good news, Parker-Hannifin plans a 3-for-2 stock split.