When a companys P/E ratio has fallen over time, while earnings steadily rise, it is a sign that price has not proportionately increased with earnings. In other words, the earnings may not be fully priced into the stock, and the stock may be undervalued.

We ran a screen on dividend stocks paying yields above 2% and sustainable payout ratios below 35%. We searched this universe for stocks that have seen a decrease in P/E (comparing the trailing-twelve-month figure to the companys 3-year average), while also seeing an increase in earnings per share (comparing last year to two years prior).

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list’s recent performance, click here.

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Do you think the market is undervaluing these stocks? Use this list as a starting-off point for your own analysis.

List sorted by dividend yield.

1. China Petroleum & Chemical Corp. (NYSE:SNP ): Independent Oil & Gas Industry. Market cap of $84.90B. Dividend yield at 4.10%. Payout ratio at 25.36%. TTM P/E at 7.71 vs. 3-year average at 9.72. Last year diluted EPS at $0.13 vs. 2-year prior EPS at $0.11. Might be undervalued at current levels, with a PEG ratio at 0.92, and P/FCF ratio at 13.65. The stock has gained 32.2% over the last year.

2. Unitrin Inc. (UTR): Property & Casualty Insurance Industry. Market cap of $1.72B. Dividend yield at 3.38%. Payout ratio at 28.71%. TTM P/E at 9.08 vs. 3-year average at 14.49. Last year diluted EPS at $2.98 vs. 2-year prior EPS at $2.61. The stock has gained 17.9% over the last year.

3. Northrop Grumman Corporation (NYSE:NOC ): Conglomerates Industry. Market cap of $17.91B. Dividend yield at 2.92%. Payout ratio at 26.74%. TTM P/E at 9.34 vs. 3-year average at 20.74. Last year diluted EPS at $6.77 vs. 2-year prior EPS at $4.87. The stock is a short squeeze candidate, with a short float at 8.52% (equivalent to 10.42 days of average volume). The stock has gained 34.23% over the last year.

4. Erie Indemnity Co. (NASDAQ:ERIE ): Property & Casualty Insurance Industry. Market cap of $4.10B. Dividend yield at 2.80%. Payout ratio at 30.84%. TTM P/E at 12.81 vs. 3-year average at 16.63. Last year diluted EPS at $2.85 vs. 2-year prior EPS at $1.89. The stock has gained 61.5% over the last year.

5. The Coca-Cola Company (NYSE:KO ): Beverages Industry. Market cap of $154.59B. Dividend yield at 2.79%. Payout ratio at 34.04%. TTM P/E at 13.06 vs. 3-year average at 17.16. Last year diluted EPS at $5.06 vs. 2-year prior EPS at $2.93. The stock has gained 32.72% over the last year.

6. AFLAC Inc. (NYSE:AFL ): Accident & Health Insurance Industry. Market cap of $21.21B. Dividend yield at 2.65%. Payout ratio at 25.92%. TTM P/E at 10.20 vs. 3-year average at 13.44. Last year diluted EPS at $4.95 vs. 2-year prior EPS at $3.19. Might be undervalued at current levels, with a PEG ratio at 0.85, and P/FCF ratio at 2.89. The stock has gained 0.24% over the last year.

7. Chico’s FAS Inc. (NYSE:CHS ): Apparel Stores Industry. Market cap of $2.73B. Dividend yield at 2.58%. Payout ratio at 25.59%. TTM P/E at 22.10 vs. 3-year average at 34.28. Last year diluted EPS at $0.64 vs. 2-year prior EPS at $0.39. The stock has had a good month, gaining 11.57%.

8. JPMorgan Chase & Co. (NYSE:JPM ): Money Center Banks Industry. Market cap of $158.87B. Dividend yield at 2.51%. Payout ratio at 12.70%. TTM P/E at 8.53 vs. 3-year average at 15.86. Last year diluted EPS at $3.96 vs. 2-year prior EPS at $2.24. The stock has gained 3.95% over the last year.

*P/E, EPS data, and dividend yield sourced from Screener.co, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.