Getting US dividends from Canadian stocks is a lot simpler than you may think even if you feel the US dollar is expensive. The strategy is simple with the right discount broker.
Why Get US Dividends from Canadian Stocks?
As a Canadian, it’s very important to realize how small our economy is. While it is a good economy, it is a small one and it is mostly focused on financial and energy blue chip stocks. It is acceptable to be proud of it but as an investor, you want to be objective and realize that you need exposure to other economies.
You may choose to do it through indexes but personally, I do it by buying US companies. One key factor to buy US companies is that you need US dollars. The currency exchange rate may seem prohibitive at times but that doesn’t have to be the case.
Related: Currency Exchange with DLR and DLR.U ETF
There was a time when the Canadian dollars was at parity and it was a good time to just buy US companies. With the currency exchange, there is a ‘value’ blocker that all Canadian investors need to get over.
Aside from exchanging currencies using your favorite method, you can start earning US dividends by holding Canadian stocks on a US exchange that declare their dividends in USD.
There are many large public corporations in Canada that also trades on the New York Stock Exchange (NYSE) allowing you to earn US dividends. The dividend is also eligible for Canadian dividends since it is distributed by a Canadian company. The shares can be moved between the TSX and the NYSE through a process called journalling so you can buy them in Canadian dollars, move the shares over to the NYSE and then earn US dividends.
Cross-Listed Canadian Dividend Stocks
Building a cash flow in US dollars isn’t out of your reach and you can do it with your Canadian dollars. This list of companies below comes from the CDN Dividend Stock Screener. There might be others, but I consider those the companies worth paying attention to and some of them are the safest Canadian dividend stocks. As you can see, there are many options to earn US dividends and put it to work towards a US investment.
While all of the companies below are cross-listed stocks, not all of them declared in US dollars. Those that pay in US dollars will provide you with the expected dividend yield when held in a US account. Holding a Canadian stock on a US exchange that pays in Canadian currency will, unfortunately, trigger a currency exchange but you can still earn income in USD.
19 US Dollar Dividend Payers
These companies will pay the expected dividend rate in US dollars. Just buy them on the Canadian side and journal them on the US account and it will start paying US dividends. Slowly, you will build your US cash account to buy US holdings without incurring a currency exchange. Their accounting is pretty much done in USD.
27 Canadian Dollar Dividend Payers
These Canadian companies also trade on a US exchange and declare their dividend in Canadian dollars. When holding them on a US exchange, the Canadian dividend will be converted to US currency. You still can earn US dollars but you could also just earn Canadian dividend and wait to exchange once you have enough.