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Dow highs aren't the only sign of stock market cheer: The wave of nearly 6,000 U.S. mergers and acquisitions that began last fall is the highest September-to-March tally since Dealogic started tracking M&A in 1995.
While the $656 billion in deals for companies like LucasFilm and Heinz reflects buyers' faith in the U.S. economy (deals overseas have lagged), the readiness to pay up may also signal a late-stage bull market. So pick your own purchases carefully.
Your field guide
Buy the bankers: Ride growing interest in the financial sector; firms thrive on rising market and consumer confidence and get paid for deals they broker. Invest via Vanguard Financials ETF or Oppenheimer Equity Income , a Morningstar five-star fund holding M&A players (sales charge: 5.75%).
Protect your yield: Make sure your favorite dividend stocks can raise payouts even if they deploy cash on deals and business expansions.
Under the "key ratios" tab at Morningstar.com, look for a payout ratio -- the share of dividends to earnings -- below 40%. "Low ratios mean companies aren't stretching themselves to pay dividends," says S&P analyst Howard Silverblatt.
Look for value: As prices rise, lower your risk of overpayment by focusing on funds that hunt for bargains, says James Paulsen of Wells Capital Management. One option: Money 70 fund T. Rowe Price Equity Income , which holds cheaper stocks than its value-index benchmark.