How the "American Oil Pension" Is Able to Pay Out So Much Income

One of the businesses that has taken advantage of the A.O.P. arrangement is Kinder Morgan Energy Partners (KMP)— a Texas-based oil pipeline company.

Like the other 50 A.O.P. businesses operating in the U.S., Kinder Morgan's business is pretty simple:

They own and operate 22,000 miles of pipeline in the U.S and get paid to transport oil and natural gas.

There's nothing sexy about what they do...

Except that they pay out an absolute fortune to their shareholders...

Take a look:

Over the past fifteen years, Kinder Morgan has increased its dividend payouts by 1,100% and has crushed the S&P 500. They have returned total gains of 1,318% since Dec. '96... about 10-times more than regular stocks.



How's this possible?

Like every other A.O.P. business operating today, Kinder
Morgan became corporate tax-exempt when they adopted the A.O.P. business structure in 1997...

As U.S. law dictates, in exchange they immediately stopped paying corporate taxes... and started sending shareholders large paychecks, 4-times a year.

They used that extra "tax" money — which otherwise would go straight to the IRS — to pay shareholders instead.

Consider...• Alfred Reaver, a 34-year old bus driver from Indiana, who bought his first block of Kinder Morgan shares in the fall of 2002 and has been "happily collecting growing distributions every year since."
• Or Samuel Osborn who bought into Kinder Morgan five years ago and has had the opportunity to since receive 20 distribution checks on top of a near 100% return on his investment.


Kinder Morgan has increased or matched their payouts to their shareholders every single year, for 16 years in a row!

Why would a business like Kinder Morgan want to be so extraordinarily generous with their shareholders?
Simple...