In 1987, in order to curb the American reliance on foreign natural resources, Congress added to the US Code Title 26, Subchapter F, a corporate tax option that created Master Limited Partnerships (MLPs).
These entities are exempt from corporate tax provided they generate the majority of their revenue from the “production, processing, storage, and transportation” of United States natural resources. MLPs are also required to distribute practically all corporate earnings to shareholders in the form of “Freedom Checks”, making MLPs a viable income producing investment option. Learn more about Freedom Checks at Release Fact.
Matt Badiali from Banyan Hill Publishing has spent the last two decades evaluating natural resources and their investment potential. He feels that MLP’s are an under-utilized option and that more investors should examine the profitability Freedom Checks can add to their portfolio.
Through Mr. Badiali’s research, there are 568 companies that are able to take advantage of this tax law. Mr. Badiali’s further research concludes that the best MLPs for investment are the ones who have at least $1 billion of assets in highly marketable natural resources in addition to proven profitability and hearty financial statements. As a cash-flow investment choice, an MLP can add diversity to a portfolio while generating income through its Freedom Checks. With care and caution, an MLP can prove a valuable addition to a portfolio.
The trading process of MLPs is similar to dividend yielding stocks, and like dividends, are generally paid quarterly. Unlike dividends, however, MLP Freedom Checks can be big. Because MLPs don’t retain earnings and generally do not reinvest profits, all profits are passed through to the shareholder. The size of the profit distribution is determined by the number of units a shareholder has, so initial investment size and reinvestment choices will contribute to the amount of profit distribution each shareholder will receive. By re-evaluating forgotten investment strategies, portfolio income can be increased and an additional source of cash-flow can be uncovered. Learn more: https://moneymorning.com/2018/03/08/the-truth-about-freedom-checks-not-a-scam/