Based on earnings forecasts, shares of U.S. companies seem like a good deal. With the S&P 500 index trading at around 1070 and its underlying operating earnings projected to top $83 this year, stocks can be said to broadly fetch less than 13 times earnings, a smidgen below their historic average.

There's reason for caution. Putting aside the prettying-up that goes into operating-earnings math (index earnings are expected to barely top $70 if we include the "extraordinary items" that have become all too ordinary in financial reports), there's still the matter of the size of company profits. If forecasts hold, S&P 500 earnings this year will top those of every other year in the history of the index except bubbly 2006, when they came in at $87 and change.

Perhaps that's reason for cheer, but if companies have become this profitable by shedding workers (the unemployment rate has more than doubled in three years), why would they resume hiring? And if they don't resume hiring, who'll be flush enough to continue buying their goods?

Perhaps the safest course for stock investors is to focus on shares that are significantly cheaper than the broad market relative to earnings, and that offer sturdy dividends. The three companies below are selected form the S&P Composite 1500 index of small, midsize and large companies. Each has a single-digit price-to-earnings ratio based on current fiscal-year forecasts. Also, each has a dividend yield of at least 3% and has increased its payment recently.

Eli Lilly

Price-to-earnings: 7
Dividend yield: 5.7%

Eli Lilly (LLY) is unpopular with investors at the moment, even judging by the standards of major drug developers, most of which trade at deep discounts to the broad market. The company has produced few new drugs in recent years, and earlier this month it abandoned costly research on a treatment for Alzheimer's disease after it proved ineffective. The company s biggest seller, Zyprexa for depression, will face generic competition late next year. Management says it's focused on developing drugs from within, rather than pursuing a giant acquisition or merger. If that keeps cash free for dividends, shareholders might make out just fine. The stock yields a whopping 5.7%, and at just seven times earnings, it's already priced for meager growth expectations.

ConocoPhillips

Price-to-earnings: 9
Dividend yield: 4.1%

A year ago, ConocoPhillips (COP) had little to boast about. Now, it can at least say it's not British Petroleum (BP). The company remains challenged in its ability to increase production. However, instead of going on a shopping spree, it's doing the opposite. Management has a plan to liquidate $10 billion worth of non-core assets, including a stake in Russia's Lukoil, creating a flood of free cash to be spent on share repurchases. The company's stock market value is just under $80, so the money will go a long way. With the dividend increased this past spring, shares now yield 4.1%. Critics of the company's plan call it financial engineering, but management believes the stock to be a good deal at less than nine times earnings. Investors seem to agree. ConocoPhillips stock has easily outperformed shares of British Petroleum, ExxonMobil (XOM) and Chevron (CVX) over the past year.

PPL

Price-to-earnings: 9
Dividend Yield: 5.3%

PPL (PPL) generates electricity using coal, natural gas, hydropower and nuclear reactors, and delivers electricity to about four million customers in Pennsylvania and the U.K. Its stock has been a lousy performer over the past year. That might be a positive sign, according to a July report by East Shore Partners, a Long Island research boutique. The utility industry is highly fragmented and needs scale in order to make needed infrastructure investments in comings years, which suggests a merger wave is imminent, according to the report. Ten of the last 13 takeovers have been of companies with poor recent stock performance. Hence, PPL might be cheap enough to attract a suitor. If it's not, investors should be consoled by the stock's 5.3% dividend.