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QE3 Not Required: Three Stocks Thriving Without the Fed

When U.S. Federal Reserve Chairman Ben Bernanke opened the floodgates of easy money with quantitative easing (QE3), Wall Street staged a party.

But even though the market quickly jumped to five-year highs, stocks fizzled shortly thereafter.

And that leaves investors wondering whether this market has staying power.

"The question now is if investors feel brave enough to continue to buy stocks at such elevated levels," Fawad Razaqzada, market strategist at GFT Markets wrote in a note to investors.

Investors looking for a safer route should focus on companies that can thrive on their own merits — even without an intoxicating shot of QE3.

Companies that make products we have to have – the necessities of life, in other words — tend to be more resistant to market ups and downs.

Let's take a look at three companies that have delivered steady, reliable returns for decades — with or without QE1, QE2, QE3 or, someday, QE99.

General Mills (NYSE: GIS) Satisfies Investors' Hunger

It's a fact — people have to eat.

And steady sales make a food company's shares less volatile than the overall market.

One food company, General Mills Inc. (NYSE: GIS), controls some of the most recognizable brands on the planet, including Wheaties, Pillsbury, Old El Paso and Betty Crocker.

But the best food companies also invest in long-term trends — like the shift toward eating healthier foods.

So GIS has added up-and-coming labels like Cascadian Foods, Good Earth and Muir Glen to its stable.

But that's not all.

In order to increase its international exposure, General Mills has been on an acquisition spree. Its most notable purchase last year was Yoplait International, helping to boost international sales.

U.S. sales accounted for 61.6% of GIS revenue in the latest quarter, down from 65.2% a year ago.

Overall sales at General Mills rose 5.3% year-over-year in the last quarter, to $4.05 billion. Net earnings rose 35.3%.

And this is a company that believes in rewarding investors.

In fact, General Mills has been paying steady dividends for 113 years — and counting. Its current quarterly payout of $0.33 a share yields a tasty 3.3%.

The next two stocks that don't need QE3 include two energy companies gushing profits for investors.

Exxon Mobil (NYSE: XOM) Pumps Profits

Oil is another economic necessity, and a classic investment to boot. And right now, a Bakken oil well in North Dakota is one of the world's most profitable investments.

An average well is expected to produce about 540,000 barrels of oil during a 29-year lifespan, according to the North Dakota Department of Mineral Resources.

At current prices of $90 a barrel, it adds up to a whopping $45 million for each well.

But Bakken oil can be expensive to extract. That's where big oil companies with deep pockets come in.

And no oil company has deeper pockets than Exxon Mobil Corp. (NYSE: XOM).

Exxon Mobil recently bought 196,000 acres of land in the Bakken from Denbury Resources Inc. (NYSE: DNR) for $1.6 billion in cash.

The deal doubles XOM's Bakken holdings and will bring its production to 47,000 barrels per day — triple the output from a year ago.

It's just one more example of how Exxon Mobil continues to outmaneuver its rivals. With its 2010 purchase of natural-gas driller XTO Energy, Exxon Mobil also became the biggest gas producer in the country — a long-term bet on U.S. energy independence.

XOM reported second-quarter net income of $15.9 billion, up from $10.68 billion a year earlier – a quarterly record.

Exxon Mobil now pays investors a juicy annual dividend of $2.28 a share. Its annual payout has grown by 6% for the last 30 years.

The Kinder Morgan (NYSE: KMP) Pipeline to Prosperity

Another way to approach oil investing is with Master Limited Partnerships (MLPs).

In the MLP business model, the companies don't actually take ownership of the commodities they transport, store and process.

Instead they simply act as gate-keepers, extracting a toll every time a transaction takes place. That means they profit regardless of the volatile price of oil.

Better still, MLPs offer a significant tax shield for investors.

You see, like real estate investment trusts (REITS), MLPs are pass-through entities that by law must distribute 90% of their profits to individual unit holders.

But getting a hefty distribution is just part of the fun — a lot of MLPs also deliver huge capital gains.

Kinder Morgan Energy Partners LP (NYSE: KMP), the biggest of the midstream MLPs, now has a market cap of $28.4 billion.

It owns an interest in or operates approximately 75,000 miles of pipelines and 180 terminals.

But here's the beauty of KMP's business.

Even though revenues dropped by 7% last quarter, profits increased by 23%.

Kinder Morgan has increased its distribution 44 times since current management took over in February 1997. It now pays out $4.92 annualized, and its unit price has risen from $5.87 to $82.08 — for a whopping capital gain of 12,982%.

With a return like that, who needs QE3?

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