Three Canadian Stocks On My Watchlist

I’m always looking for ways to improve and grow my Freedom Fund through international diversification when possible. Most of my portfolio is currently invested in major U.S. blue chip companies like Johnson & Johnson (JNJ) and PepsiCo, Inc (PEP). The great thing about these companies, however, is that they are multinational companies that operate on a global scale, so even though they are headquartered here in the U.S., they are truly international companies.

But that doesn’t mean one shouldn’t still own companies that are based in countries other than the United States. Many great companies operate in other countries and have great exposure to markets outside our borders. There are thousands of companies out there that aren’t U.S.-based. The great thing is that you don’t have to fly over to London to buy U.K.-based stocks. Many great international companies trade on our exchanges here in the U.S. using American depository receipts (ADR). Also, some foreign-based stocks trade on our exchange just like any other stock. These are “interlisted” stocks, which means they trade on multiple exchanges. This is typically true of major Canadian stocks.

Lately, I’ve been looking at some of these interlisted Canadian stocks as possible additions to my portfolio. There are some inherently attractive qualities to Canadian companies. First, they operate in a very stable country. Canada has one of the most stable governments in the world, and as such also have a very stable currency. They are neighbors to this country with a shared language and often common goals. Another great thing is that many of the Canadian companies that have common stock that’s interlisted on our exchanges have operations that are easy to understand and translate well for an American investor.

After some research over the last week or so I’ve narrowed my interest to three specific Canadian stocks, which I’ll discuss below.

The Bank of Nova Scotia (BNS)

Known as Scotiabank, this is a great bank from everything I can see. This is a global bank that operates in over 55 countries and serves over 19 million customers around the world. One of the great things about this bank, a characteristic shared by many of the major Canadian banks, is that they didn’t have to cut their dividend during the recent financial crisis. This is partly due to the fact that Canada has a fairly strict set of regulations regarding banking, which may limit the chances of explosive growth but also limits the possibility of financial implosion. In order to get a mortgage in Canada you need to have provable sources of income and money down. On the other hand, there is some data showing that Canada may be in the midst of a housing bubble. This is something to watch.

BNS operates in 4 distinct segments: Canadian banking, international banking, global wealth management and global banking and markets. Fundamentally, this bank looks wonderful. The debt/equity ratio stands at 0.3 and the yield is currently at 3.78% based on the CAD 0.57 quarterly dividend payout. The Canadian dollar and U.S. dollar trade almost at parity right now, so that makes a lot of conversions relatively easy. EPS has grown from $3.05 in 2008 to $5.22 in 2012. That’s a CAGR of 14.38%. The dividend has also grown from an annualized $0.73 CAD in 2002 to its current annual payout of $2.28 CAD. The current P/E ratio stands at 11.56 and P/B is 2.0. The payout ratio is currently at 44.6%, so there is plenty of room for the dividend to continue growing. The bank is conservatively managed with global exposure and is actively growing earnings and dividends at a healthy clip. This is tops on my watch list right now.

Toronto-Dominion Bank (TD)

Another well-run Canadian bank. TD also was able to keep paying out investors during the financial crisis and has gotten back to raising the dividend, twice during fiscal 2012. This bank operates in four segments: Canadian personal and commercial banking, U.S. personal and commercial banking, wealth and insurance and wholesale banking. Although not a global bank like BNS, this can have upside as they stick to their strengths in Canada and the U.S. This is the second largest bank in Canada, so there is certain scope and economies of scale that come with that size.

Currently trading at a P/E of 12.47 and P/B of 1.8 with a yield of 3.65%, this isn’t quite as cheap as BNS, but there is still some value in the shares. The debt/equity ratio stands at 0.3. EPS have grown from $4.87 in 2008 to $6.76 in 2012, for a CAGR of 8.54%. The dividend has also grown significantly, up from an annualized payout of $1.12 CAD in 2002 to the current annual payout of $3.12 CAD. The payout ratio stands at 47%, so like BNS there is plenty of room for dividend growth. This is another conservatively managed bank, much like all of the big Canadian banks, and I think there is plenty of room for growth ahead. TD has actually recently indicated that they intend to increase their dividend payout ratio from a previous 35-45% to 40-50% and also will likely raise the dividend twice per year for the foreseeable future. That’s great news for dividend growth investors!

Telus Corporation (TU)

Telus is a large, and growing telecommunications services company that serves more than 13 million customers in Canada. They operate in two segments: wireline and wireless. TU hasn’t had explosive growth over the last 5 years, as is the case with almost any telecommunications company. I look at telecommunications companies like utilities. They provide a service that people increasingly need, although unlike utilities there is a lot of competition that crosses over regions.

TU has grown earnings from $3.79 in 2007 to $4.05 in 2012. Growth has not been impressive. Revenue growth is much the same going from $9.1 billion in 2007 to $10.9 billion in 2012. EPS has grown at a rate of 1.34% over this period, compounded annually. Management has been committed to growing the dividend during this period, however, going from $1.50 CAD in 2007 to $2.38 CAD in 2012. This brings the payout ratio up to 65%, which is in-line for a telecommunications company. The yield currently stands at 3.68%, factoring in exchange rates and based on the current quarterly payout of $0.64 CAD. The things I like about TU are the fact that its network covers 95% of Canada and its subscription numbers have been growing at a decent clip, up from 11.6 million in 2007 to 13.1 million in 2012. From the research I’ve conducted over the last week it looks like customers are relatively happy with the service from Telus. Without further significant growth in EPS, however, dividend growth will be limited going forward. Telus also manages its debt load much better than competitors. Telus has a debt/equity ratio at 0.6, compared to 1.4 for BCE Inc. (BCE) and 2.9 for Rogers Communications, Inc. (RCI). The P/E ratio stands at 17.28, so the valuation would have to come down significantly for me to purchase shares.

Conclusion

I view all three companies as attractive, high quality companies. I have them listed in order of my interest. There were a few great Canadian companies that were cut from the list for varying reasons. Canadian National Railway (CNI) has a yield (1.77%) that’s too low for me currently. Rogers Communications, Inc. (RCI) has debt that is way too high for me to be comfortable with right now. BCE, Inc. (BCE) also has a debt load that is just out of my comfort range. However, BCE has a pretty significant yield (over 5%) and a valuation that isn’t too expensive. So, BCE would be right up there with TU if we get a slight correction in the shares. BCE, however, has spotty dividend growth but appears to be on track as far as the last 5 years are concerned.

I currently do not own any Canadian stocks, but am highly interested in the three I listed, as well as BCE to a degree. It should be noted that American investors with Canadian stocks in taxable accounts will pay a 15% withholding to the Canadian government. This foreign tax, in many cases, can be reclaimed when one fills out their tax return.

How about you? Own any Canadian stocks? Interested in any of the above? Any I should consider?

Special note: Thanks to Dividend Ninja for some assistance during my research.

Full Disclosure: Long JNJ, PEP

Thanks for reading.

Photo Credit: Free Digital Photos.net

Comments

  1. says

    I don’t own any Canadian stocks, but the ones you mentioned have me interested. The withholding doesn’t bother me too much since you get it back, although it is a bit annoying.

    It doesn’t surprise me that there’s a lot of Canadian banks on your list. They weathered the recession way better than the US banks did.

    • says

      MFIJ,

      These three stocks also trade on the NYSE as well as the TSX. So if you buy the NYSE listed Canadian companies, you will be buying a U.S. listed stock. You will not have to worry about foreign withholding taxes etc. i.e. TU for Telus.

      Cheers
      The Dividend Ninja

    • says

      Journey,

      Canadian banks definitely held up better under the recent financial crisis/Great Recession. I’ll take a static dividend over a cut dividend any day of the week. All of the Canadian banks appear to be solid long-term investments, but the two I outlined struck me as having the most outstanding qualities.

      Best wishes!

    • says

      Ninja,

      I don’t think that’s correct – not paying a 15% withholding on an interlisted stock like TD or BNS if you hold in a taxable account.

      There’s actually a very lengthy tax guide that Royal Bank published on this matter and it implicitly states that due to the tax treaty between the U.S. and Canada, U.S. investors holding Canadian-based stocks (including interlisted) will pay a 15% foreign tax withholding to the Canadian government (because Canada wants their money if you’re a U.S. investor or a Canadian investor), UNLESS you invest in a qualified retirement account.

      For reference:

      http://gmi.rbcis.com/rt/gss.nsf/File%20Attachments/WithholdingTaxGuide/$FILE/WithholdingTaxGuide.pdf

      I also checked with the tax department of my brokerage, and they also stated that Canadian interlisted stocks will have a 15% Canadian withholding attached to them.

      I did some research elsewhere on the web and this is stated everywhere.

      Is there some specific evidence you have that states U.S. investors don’t pay a 15% withholding? I would greatly appreciate it!

      Maybe a U.S. investor that invests in Canadian stocks can shed some light?

      I remember DGI published an article about this a while back and he notes the 15% withholding as well. He’s invested in the big Canadian banks, so he must be noting this from his personal withholding:

      http://www.dividendgrowthinvestor.com/2011/07/best-canadian-dividend-stocks.html

      Best regards!

    • says

      OK Mantra, that’s good to know! ;) I assumed that becuase they were “interlisted” they would be treated as U.S. stocks,or the withholding tax would be waived.

      So what that means, is there’s really no advantage for you to buy interlisted vs the actual Canadian stock? Is that correct?

      Thanx for letting me know. :)

      Cheers
      The Dividend Ninja

    • says

      Ninja,

      Interlisted stocks are not U.S. stocks, but rather foreign stocks that are traded on our exchange. So, they carry the sames rules, and taxes.

      As far as advantages, this lies in the lack of complexity. When you buy interlisted shares or ADR shares you are buying stocks in dollars listed on an American exchange that will pay you dividends in dollars (factored for exchange rates).

      Buying stocks on foreign exchanges using foreign currency is quite another prospect altogether and involves a foreign market maker, typically. This also is difficult, or impossible, depending on your broker. Factoring it all in, you’re MUCH better off sticking to you home exchange and buying foreign stocks that trade directly on your exchange.

      Best wishes!

    • says

      I am assuming if , for an american citizin, by TD on the NYSE, they will buy the price with US dollars. If the American buys the stock on the TSX (Canadian exchange ) their money must be converted to Canadian dollars first.

      Also, if their brokerage account is US dollars only then the dividend from a Canadian company minus 15% withholding tax, will be coverted to US dollars before it is deposited into their account.

      Little bit more to keep track of it, but when it is a good quality company it is all worth it in the end. When you escape the rat race you will be saying “Sure beats working for a living”..Derek Foster says that quote from time to time.

    • says

      Anonymous,

      You’re correct on the exchanges and the conversions.

      I like that quote by Derek Foster. Derek can be a pit polarizing, but I admire him. He’s doing exactly what I hope to be doing at his age (being retired). His path to FI was a bit more exciting than mine (traveling and what not).

      Best wishes!

  2. says

    I have TD on my auto-invest list for Tuesday. As long as there is not a big jump in price tomorrow then I plan to start a small position. I was playing with google docs today and noticed my financial exposure is lower than I would like. My other current international play is TEVA and RDS.B which I continue to dollar-cost average into.

    Take Care!

    • says

      AAI,

      Nice foreign holdings there. I only hold VOD currently, so I’d like to increase my foreign exposure. Although I tend to look at PM as a foreign holding as all their sales are overseas. That’s kind of a hybrid play.

      I’ve looked at TEVA. Cheap stock. It’s one I may have to check out with more diligence at some point in the near future.

      Best wishes!

  3. says

    The only international company on my watch list is Tim Hortons (THI), and they happen to be headquarters in Canada. They’re like the Starbucks of Canada with plenty of room for expansion, plus the dividend doesn’t hurt either. They recently announced a 23% dividend increase. I believe that marks the 7th straight year the dividend has been increased.

    By the way, does anyone know how dividends are taxed for Canadian companies? I recalled 15% being withheld or something along those lines.

    Cheers!

    • says

      Henry, yes the withholding tax will be 15% for U.S. investors buying Canadian listed companies such as Tim Hortons (THI).

      You would need to be careful though with REITs, and previously listed Income Trusts that pay distributions instead of dividends. ;)

      Cheers
      The Dividend Ninja

    • says

      Henry,

      THI is an interesting play. The yield is just a tad low for me to consider as an investment, but with a few more raises and a stagnant stock price this could be right in my wheelhouse. I appreciate you bringing it to my attention.

      As far as taxes go, see my comment above. According to the tax department of my brokerage, and the information published by Royal Bank of Canada, with references to CRA, U.S. investors pay a withholding of 15% for any Canadian-based stocks. This would include THI on our exchange (U.S. listed) as well as the ones I listed above. I haven’t personally invested in any Canadian stocks yet, but will be soon. But as far as I can tell with my research a U.S. investor does pay 15% withholding. Sorry for any confusion!

      Take care.

      Take care!

    • says

      Ninja,

      THI trades on our exchange as an interlisted stock. But, as I reference above this still carries a withholding which can be later reclaimed, if in a taxable account. Retirement accounts are under a different set of rules based on the tax treaty.

      Best regards.

    • says

      Thank you Ninja and Mantra! I’ll make sure to reclaim the withheld taxes when I file my taxes next year. I wish Canada and the US had a tax treaty like the US and UK.

  4. Anonymous says

    I own BNS and BCE currently and I am a Canadian investor.

    Something that is not noted in the post is that Rogers, BCE and Telus provide TV also. Rogers and BCE have more debt possibly due to them purchasing the Ontario Teacher’s Plan ownership in the MLSE, which own Toronto Raptors (NBA) and Toronto Maple Leafs (NHL) and other entities.

    Telus and Bell (BCE) share each others cellphone towers. This saved both of these companies money in infracture. They use the same type of signal.

    • says

      Anonymous,

      The MLSE acquisition was completed just recently and was a deal worth only $1.32 billion, of which RCI and Bell share a joint 75%, so this acquisition only explains some of the debt RCI has. They’ve actually had a pretty stressed balance sheet going back at least 5 years. This deal represents only a sliver of their overall debt.

      It’s unfortunate really, because I was talking to Dividend Ninja about what a fantastic company this is otherwise. If not for the balance sheet, RCI would be a company I would love to be a part-owner in. I think they have great assets and a diverse mix of services. If they can get the relatively weak balance sheet under control I would be highly interested in purchasing shares.

      Great point there about BCE and Telus. This was something I noted during my research, as customers seemed to be pleased with both companies but simply go to who’s cheaper as they both have great coverage due to the shared infrastructure.

      Overall, I view BCE the better play out of it and RCI. BCE has a much higher yield and much better balance sheet. They are also the biggest telecom in Canada which imparts certain economic advantages. RCI has a great asset mix, but are a little overstretched, in my opinion.

      Take care!

  5. says

    As you mentioned, the bloom might be off the rose for Canadian banks. However, an interesting fact is that Canada is the only industrialized nation that did not need to give any money at all to its banks.

    I have noticed there are a lot of dividend bloggers from Canada. I don’t always pay too much attention, since they blog about stocks that I cannot buy and laws that do not apply. I wonder why there are so many Canadian dividend bloggers. Perhaps US companies are stingier. Given the populations of Canada and the USA, Canadians are more into dividend investing than we are.

    Still, I support anyone who gets off the capital gains treadmill. Cash flow is king, no matter what your currency.

    • says

      Everyday Freethought,

      Great point there about the “bloom off the rose”. To me, the biggest headwind for the big banks is the potential housing bubble Canada is in them midst of.

      See this link for just how overstretched the Canadian housing market is:

      http://www.theatlantic.com/business/archive/2013/01/the-biggest-housing-bubble-in-the-world-is-in-canada/272499/

      With potential rising rates and even a small bubble burst, this could cause lingering issues. Something to watch, as we here in the U.S. are still working our way through that bubble burst.

      As far as dividends go, from what I can see when comparing U.S. companies to foreign companies you typically see higher payout ratios and fatter yields with Canadian companies and U.K. companies and the like, but you don’t see the long streaks of raises. It appears to me, in my limited experience, that the U.S. is more cautious with payouts choosing to raise them 7-10% a year and hate to cut, while a lot of foreign companies don’t mind paying out high amounts and going a year or two without raising. It’s just a different way of rewarding shareholders.

      Best wishes!

  6. says

    I remember reading a while back that the 6 largest Canadian banks control 92% of the country’s assets. That sounded like an oligopoly I wanted to get in on. :-) I bought TD and RY, but all six looked pretty decent back then.

    • says

      S.B.

      Thanks for stopping by.

      Great point there, and you are correct. The banking sector is much different up in Canada, so you don’t see a thousand regional banks like you do here in the U.S. That imparts positive and negative consequences to both investors and customers. The oligopoly that they operate in is very attractive, and the regulations up there are very favorable for cautious investors.

      Great job picking them up a while ago. You had better foresight than me! :)

      Best regards.

  7. Anonymous says

    I am Canadian, and own BNS, TD, and BCE. BNS is perhaps Canada’s most conservative bank, but has moved to rapidly expand in Central/South America, and Asia in the last four years, and intends to have half of its profits derived from foreign branches. It is almost there now. It has more cash than any other Canadian company, $22 Billion. I used to work for BNS. TD has more branches in the U.S. than in Canada, and has the most deposits of any Canadian bank, which it uses to give more loans. It has become the model for other Canadian banks for successful U.S. expansion. No other banks stock has risen in the last five years as much as TD, followed by BNS. Both BNS and TD intend to raise dividends twice/year. I bought into BCE for the stability, and high dividend.

    • says

      Anonymous,

      Sounds like you have some great holdings there, and all Canadian stocks that I’m interested in. Seems like we see the banks the same way! :)

      BCE does indeed pay out a high, and stable dividend. It’s also been growing at a decent rate for the last 5 years. I would almost put down TU and BCE interchangeably, but picked TU for the better balance sheet (something I put a heavy weighting too).

      Great information there about BNS. I really liked what I seen when I was researching BNS. Appears to be a wonderful, wonderful bank. TD also impressed me quite a bit. Unfortunately, both have had quite a run up.

      Thanks for stopping by!

      Take care.

  8. Chris says

    As a Canadian follower of your blog, your Canadian watch list looks a lot like my portfolio. I have been maximizing my TFSA recently, but also hold some US stocks in a tax sheltered account to avoid the 15% withholding tax.

    Love your blog. Please know that it is appreciated.

    • says

      Chris,

      Thanks for your readership. It also is appreciated!

      Great job maximizing your account. I really wish I would have looked at some of these stocks a while ago. Of course, you can say that about many stocks as both of our markets have had quite a run over the last year.

      Stay in touch!

      Best wishes.

  9. Anonymous says

    These are bank that I won’t own – my own opinion. After doing my own research I found that I like my purhcase of WFC back in OCT as one I’ll stick with. My research shows that Reuters reported that Moody’s Investors Service warned on Friday it could cut its ratings on five top Canadian banks on concerns about a softening economy and volatile capital markets, a blow to a banking system named the soundest in the world four years in a row (BNS was specifically named) But the outlook for the sector is no longer as rosy. Just thought I’d let you know.

    Just call me 54 and building my retirement.

    • says

      Anonymous,

      I hear you on the sector having some headwinds. I posted an article above that shows just how out of control housing up there has been in relation to rents. It’s a potential bubble that could pop with force. We’ll see how it goes.

      It appears that your banks are better capitalized for such events than ours were and regulations favor your banks as well.

      However, I’m also a fan of WFC and recently initiated a position in the bank. I think it’s on the way up and I believe it’s still trading at a nice value here.

      Thanks for stopping by and I really appreciate your opinion!

      Best regards.

  10. says

    Excellent post Mantra! and a great analysis as well of these three Canadian dividend titans. Ironically I was going to send you a guest post a few months ago on the Canadian banks, but you beat me to it! Well done. :)

    Make sure you get the shares of BNS and TD before the earnings reports, since they will likely be very strong, and possible dividend increases as well.

    Just a reminder, you don’t need to worry about foreign income and withholding taxes. These three stocks all trade under the NYSE (as well as the TSX), and therefore will not be considered foreign stocks if you purchase the NYSE listed stocks i.e. TU for Telus.

    You will of course likely recieve your dividends in Canadian dollars. ;)

    All the best, and glad I could help!

    Cheers
    The Dividend Ninja

    • says

      Ninja,

      Thanks for the heads-up on the earnings reports. I’m thinking about initiating twin positions in both BNS and TD very soon. I’d have to pull a little capital in that I didn’t plan on using this month, so we’ll see. I really like what I see with these banks. However, as noted above I am concerned about interest rate risk and a potential housing correction.

      My timing couldn’t be worse, as both are trading near all-time highs.

      I hope all is well in Vancouver!

      Take care.

  11. says

    have you considered BMO, RY, and CM? Those are the other ones I’ve seen mentioned a lot. I like BNS’s international/Latin American exposure and BMO is under its historic PE.

    • says

      kolpin,

      I looked at all the major Canadian banks, and BNS and TD immediately became the cream of the crop for me. Your research may vary.

      I also like BNS’s international exposure. They are trying to grow in Asia, and they already have a solid footprint in Latin America. They have a great balance sheet, and I really love the direction they’re going in.

      TD’s growing quite a bit here in the U.S., which can bode well for that bank.

      Best wishes!

  12. says

    Hey DM,

    You can’t wrong with any of your choices. Just wait until the price is right.

    I own Royal Bank (RY), the biggest bank in Canada, and I’m a happy camper. It’s also my bank and it bothers me less when they charge me fees!

    Did Dividend Ninja mention anything about Power Corporation (POW)? Because he just bought some preferred shares of Power Financial, one of the holdings of Power Corp.

    I think the shares of POW are a bargain at the moment. The yield is attractive and the company is diversified as can be. Just saying.

    My girlfriend owns BCE and she’s been licking her chops with numerous dividends increased over the years. It’s the no. 1 telecommunication company in Canada — even though, their service sucks — (my humble opinion).

    Take care buddy.

  13. says

    Hi Mantra! Your selection of Canadian stocks sure has generated a lot of buzz. As a Canadian myself, I do own TD and BNS but I own BCE instead of TU. As for the Canadian banks, I think they all have their own expansion niche. For instance, BNS is more international (e.g. South America, Asia). TD is expanding aggressively in the US, particularly on the East Coast. To a lesser measure, BMO is also expanding in the US though more in the Mid-West. RY has taken the international wealth management route. As for CM, it’s less clear where it’s going. Finally, NA is more a regional bank particularly active in Quebec. Peronally, I think TD, BNS and RY are the best choice. TDE

    • says

      Engineer,

      Great list there. TU and BCE were almost a tie for me. I only picked TU because of the better balance sheet, however BCE has a much higher yield and is cheaper right now.

      Great facts about the banks. That’s pretty much what I found as well during my research. If I were to pick a third bank after the two listed above it would be RY. It’s yielding almost 4% right now, so that’s very nice.

      Best regards!

  14. sedin26 says

    Speaking of the Canadian banks, BMO paid a quarterly dividend today and raised the dividend as well! I still get excited since this was my first dividend stock and it’s nice to suddenly own one more share.
    Nice article – I’d also be keen to buy some bns if I was looking at the banks right now.

    • says

      sedin26,

      Thanks for stopping by.

      I’m with you. Receiving dividends is always exciting. For me, it’s just as exciting to see dividends roll into my brokerage account today as it was the very first time I ever received a dividend.

      Glad you liked the article, and yes BNS is cream of the crop, in my opinion.

      Take care!

  15. says

    DM – I took the easy way out and cut and pasted a post from my blog about a month ago! :)
    At that time Compounding Income asked me which were my 3 favorite dividend stocks as long-term holds. My response was:

    My 3 favorite Cdn dividend stocks as long-term holds? Wow – that’s like asking me to choose my three all-time favorite John Elway plays!!

    I will give you a few (don’t have the discipline to limit it to 3).

    First, I think if you want to be the Cdn. market you pretty much have a Canadian bank. They have a long history of increasing (or at least not cutting) their dividends, which is much harder to come by in the Canadian market than the U.S. In terms of which bank, I honestly am not sure you can go far wrong with any of the “Big 5” (TD, Scotia, Royal, CIBC, or Bank of Montreal). I like TD’s U.S. business, Scotia has the most international presence of the five, and Royal has perhaps the best capitals market program. That is why I own those three.

    I also like the pipelines, with Interpipe and Enbridge my favorites. Both are pricey, but I think they are in the sweet spot right now. Of the two I would probably take Enbridge. They have a huge inventory of projects, and they are committed to growing their dividend. Recently there have not been may dips in price, but it does fall back from time to time.

    Another favorite of mine that won’t get the coverage of those above because it lacks the market cap is Corus Entertainment (CJR.B-T). It is a media company and another Canadian company that seems to have a commitment to growing their dividends. It has a nice yield of just over 4%, and while I don’t expect it too rocket up in price, I do think there is room for the stock to grow.

    Finally, I also like AG Growth (AFN-T). I am somewhat more hesitant to recommend this one as it is likely to be a little more volatile than those above, and it does not have the dividend growth history. However, I picked it up around $32 and I like the sector it is in (agriculture, more specifically the supply of small agricultural implements).

    Hope that helps.

    • says

      Dining on Dividends,

      Thanks for the comment. Much appreciated.

      It sounds like we’re in agreement on the banks. I liked BNS and TD the best, but if I were to pick a third Canadian bank to invest in it would be RY. That looks to be another pretty solid bank.

      I noticed that the Canadian market is focused on banks, telecoms and natural resources. That makes sense as Canada is so rich in natural resources.

      ENB appears to be richly valued to me, and the yield isn’t very high…at least not on my market. I have KMI as my pipeline play. ENB appears to be a great pick, just out of my range right now.

      I haven’t looked at AG Growth. I’ll have to take a look at that one. Same with Corus. Haven’t heard of it before. I always appreciate new opportunities to scout out!

      Best wishes.

  16. Larry says

    Hey DM,

    I have a canadian stock called Shaw Communications, Inc. (SJR)and I noticed that my broker withholds foreign tax on my dividends (around 12% i think). Anyway I was wondering if at the end of the year I have to pay additional taxes on that on top of those foreign taxes. Thanks for any help.

    Love the blog

    • says

      Larry,

      Thanks for stopping by. I’m really glad you enjoy the blog! I enjoy writing it. :)

      If you hold SJR in a taxable account here in the U.S., then you will pay 15% withholding taxes to the Canadian government. This will come out immediately, and the dividend you receive will be less the taxes. You can reclaim this at the end of the year on your tax return.

      You will also pay the U.S. government taxes on the dividends, as it’s still dividend income. This will be paid at the end of the year when you claim your taxes and reconcile your 1099-Div statement.

      As always, this is just from personal experience and you may want to consult a tax professional for expert advice.

      Best wishes!

  17. Babsy A says

    DM……What’s the latest update since Mar 1, 2013? I’m interested in investing in Canadian stocks trading on the US exchange.

      • says

        Babsy A,

        The Canadian stock market has done very well over the last year or so, much like our own market here in the US.

        I’m not actively looking at investing in any Canadian companies at the moment, but the companies I watch up there remain the same. The Canadian stock market in general isn’t quite as diversified as our own, so you’re somewhat limited to the big banks, telecoms, and natural resource companies. At the right price, I’d be interested in adding to my BNS or TD positions. And I do also watch the telecoms, though my exposure there via T, VZ, and VOD is already really more than enough for me.

        But I think BCE and TU look pretty solid in the telecom space, albeit not particularly cheap right now. And I don’t think you can go wrong with any of the big banks. TD, BNS, and RY are my favorites. Again, none are really a steal right now, which isn’t a surprise considering where stocks have gone.

        I hope that helps!

        Cheers.

        • Babsy A says

          Jason, thanks so much for your quick reply. I appreciate that.

          I wasn’t sure whether this would connect with your current blog on the other page so I wrote a more lengthy entry there too. No need to answer that one unless you want others to see an answer to it. I will definitely be exploring the possibilities on both sides of the border & doing something soon.

          Thanks again!
          Babsy A

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