With the Dow nearing the 14,000 mark, many investors are getting nervous that the best gains in the stock market are behind them. Professional money managers are considering selling out of the market, capturing gains, and taking the rest of the year off. Should you do the same?

Investor's dilemma
The Dow Jones and the S&P 500 are up 107% and 115%, respectively, since the market doldrums of March 2009. But taking money out of the market based solely on fear, in the hopes of getting back in at a better time, is a losing proposition.

For the patient, long-term investor, there are good stock buys in today's market. I've found five companies with competitive positions whose stocks boast attractive valuations, strong dividend yields, and low dividend payout ratios.

Check them out:


P/E Ratio

Dividend Yield

Payout Ratio

Illinois Tool Works (NYSE: ITW) 13 2.5% 30%
US Bancorp (NYSE: USB) 12 2.3% 24%
Fidelity National Financial (NYSE: FNF) 13 2.7% 25%
Cummins (NYSE: CMI) 9 2.1% 16%
Ford (NYSE: F) 3 1.9% 2%

Source: Yahoo! Finance.

These five stocks each boast a price-to-earnings ratio less than the S&P 500's current P/E of roughly 16. And while the average dividend yield of S&P 500 companies is 2%, nearly all of the companies in the table above boast yields greater than that of the market. Illinois Tools Works, Fidelity, and US Bancorp have outperformed the market during the past 12 months, returning roughly 37%, 38%, and 42%, respectively. Meanwhile, both Cummins and Ford have underperformed the market, returning approximately 4% and 2%, respectively.

Let's take a closer look at each of these companies.

Illinois Tool Works
As the global economy recovers, spending increases are expected in transportation and construction, two industries that comprise the bulk of this company's revenues. Century-old Illinois Tool Works boasts nearly 20,000 patents either in force or pending, signaling a history of successful new product innovations. The company's disciplined acquisition strategy has increased its profitability.

US Bancorp
It's what regional bank US Bancorp isn't that makes it attractive for investors: It didn't participate in aggressive lending to the same degree as its "too big to fail" counterparts and doesn't have comparable investment banking reach. The bank's reduced risk profile and strong capital position helped it boast enviable returns over the past quarter-century.

Fidelity National Financial
Fidelity provides title insurance and mortgage services in the U.S. As it's trading near its 52-week high, its stock price may scare investors away. But the stock's enticing valuation and generous dividend coupled with the company's possibly greater volume of business as a result of a proposed Consumer Financial Protection Bureau rule could prove a real win for shareholders.

Cummins manufactures engines to run on natural gas, currently a much cheaper and cleaner alternative to diesel. Despite recent weakness in truck orders from China, this engine maker stands poised to profit from the global trend toward energy efficiency.

Flirting with bankruptcy and tempted by TARP, CEO Alan Mulally instead sold off Jaguar, Land Rover, Volvo, and Aston Martin, renewed company focus on quality, improved products, and strengthened Ford's brand. These actions helped Ford retain the driver's seat among U.S. auto manufacturers. Without a doubt, the financial crisis left Ford fishtailing, but since that time, the stock has performed like a well-tuned vehicle.

Foolish bottom line
Even with the Dow traversing the fast lane, there are good buys to be found in today's market. Consider these five stocks for your portfolio.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.