Ever since Matt Badiali held up a check showing how someone he knew made $114,287 off an investment many people across America took notice. This editor at Banyan Hills Publishing and natural resources investing expert called it a Freedom Check and told people they could also make a lot of money off this little-known opportunity. It is a private check from a private company, not the government, he explained, although the opportunity to get Freedom Checks in the mail was done through a law enacted by Congress. There’s a statute called 26-F, created in 1987, which was passed with little attention to what a great opportunity it was for Americans. Read more about Freedom Checks at banyanhill.com.
There are now 568 American businesses which meet the qualifications for sending out Freedom Checks to their shareholders. While little known it is a perfectly legitimate investment which some in-the-know investors have been taking advantage of for years, some even decades. These people have invested in what are known as MLPs, or “master limited partnerships”. What the term MLP means is that this type of company is first in the oil and gas industry. Second, all but 10% of their annual revenues must by law come from the transportation, storage, production, and processing of American oil and gas. Most commonly this oil and gas comes from the Marcellus Shale, Bakken Shale, and Permian Basin but it can come from other sources. Second, they are required by Statute 26-F to return 90% of what they earn back to their shareholders. Read this article at Money Morning.
Batt Badiali says that the best way to think about it is that they have to pay dividends to shareholder like many normal companies do. Investors don’t have to pay taxes on them like they do dividends, though, as they are a return of capital. Even if you sell your shares in an MLP you also just pay the lower capital gains taxes for that year.
Just about every MLP pays out their dividends every three months as their fiscal quarter’s end. Occasionally some do pay out on a monthly basis, however. Beyond oil and gas companies, there are other pass-through firms that are also qualified to send out Freedom Checks. This can include real estate investment trusts most commonly although some companies in other industries also qualify. Matt suggests that investors should only put their money in firms with over a $1 billion in “In-Demand” assets and only look at companies with raw materials that are currently really in demand.