Michael Huynh May 23, 2023
Canadian companies may choose to pay US dividends for a few reasons. Although some companies are being traded in Canadian exchanges, their main operations are in the US. As a result, the majority of its profit and cash flow comes from the US dollars. Therefore, it is more efficient to pay shareholders directly in US dollars instead of converting back to Canadian dollars just for the sake of being listed in Canadian exchanges, which will incur additional expenses from currency conversion and hedges. Secondly, Canadian companies may want to attract a group of investors who want to earn income from US dollars without being subject to foreign exchange fees and currency fluctuation risks, allowing them to reinvest and purchase US securities.
In terms of taxes, Canadian investors get favourable treatment from this source of income, as dividends in US dollars paid by Canadian companies are considered similar to Canadian dividends. As a consequence, this would not be subject to the US foreign withholding tax of 15%, and the accountants just simply convert that US income source into Canadian dollars at an appropriate exchange rate to calculate investors’ total dividend income.
Below we have screened for companies with the following criteria:
- Companies pay dividends in US dollars
- Top 25 names with the largest market capitalization
- The trailing twelve-month dividend yield
- Historical dividend growth rate in the last five years
Here is the screener:
| Identifier | Company Name | Market Cap (CAD) | Sector | Dividend Currency | Dividend Yield | Dividend Growth Hist 5 YR |
| TRI.TO | Thomson Reuters Corp | 80,948,635,904.30 | Industrials | USD | 1.4% | 3.3% |
| BN.N | Brookfield Corp | 72,508,880,743.01 | Financials | USD | 1.7% | 8.4% |
| CSU.TO | Constellation Software Inc | 57,185,767,535.60 | Information Technology | USD | 0.2% | 0.0% |
| WCN.TO | Waste Connections Inc | 48,493,798,783.78 | Industrials | USD | 0.7% | 13.9% |
| NTR.TO | Nutrien Ltd | 39,571,279,530.99 | Materials | USD | 3.2% | |
| GOLD.N | Barrick Gold Corp | 38,924,863,641.41 | Materials | USD | 3.9% | 40.2% |
| FNV.TO | Franco-Nevada Corp | 35,789,977,443.23 | Materials | USD | 0.9% | 7.1% |
| AEM.TO | Agnico Eagle Mines Ltd | 32,360,108,934.09 | Materials | USD | 3.2% | 31.3% |
| QSR.N | Restaurant Brands International Inc | 31,826,682,315.67 | Consumer Discretionary | USD | 2.1% | 15.7% |
| WPM.TO | Wheaton Precious Metals Corp | 25,834,516,388.28 | Materials | USD | 1.4% | 12.7% |
| FFH.TO | Fairfax Financial Holdings Ltd | 24,315,245,236.46 | Financials | USD | 1.3% | 0.0% |
| BIP.N | Brookfield Infrastructure Partners LP | 22,251,782,695.32 | Utilities | USD | 3.9% | 4.4% |
| MG.TO | Magna International Inc | 21,467,729,458.32 | Consumer Discretionary | USD | 3.2% | 10.4% |
| GFL.TO | GFL Environmental Inc | 18,517,193,773.55 | Industrials | USD | 0.1% | |
| BAM.N | BROOKFIELD ASSET MANAGEMENT LTD | 17,727,303,748.05 | Financials | USD | 0.0% | |
| OTEX.TO | Open Text Corp | 14,655,567,750.39 | Information Technology | USD | 2.2% | 13.1% |
| TFII.TO | TFI International Inc | 12,664,441,767.60 | Industrials | USD | 1.0% | 14.1% |
| BEP_u.TO | Brookfield Renewable Partners LP | 11,402,978,667.27 | Utilities | USD | 4.3% | 0.5% |
| FSV.TO | FirstService Corp | 9,228,677,153.92 | Real Estate | USD | 0.4% | 4.4% |
| WFG.TO | West Fraser Timber Co Ltd | 9,140,922,657.93 | Materials | USD | 1.2% | 33.6% |
| K.TO | Kinross Gold Corp | 7,778,729,468.24 | Materials | USD | 2.5% | |
| GIL.TO | Gildan Activewear Inc | 7,743,661,639.80 | Consumer Discretionary | USD | 2.1% | 12.6% |
| AQN.TO | Algonquin Power & Utilities Corp | 7,690,383,932.67 | Utilities | USD | 8.4% | 9.1% |
| BEPC.N | Brookfield Renewable Corp | 7,516,693,762.89 | Utilities | USD | 4.4% |
*Updated as of July 6, 2023
Furthermore, we include these companies’ trailing twelve-month dividend yield that these companies currently offer.Lastly, the screener also consists of a 5-year dividend historical growth rate, as we believe a long-term track record of paying consistent and increasing dividends indicates the predictable, and recurring nature of the business models, as well as healthy cash flow generation of the underlying fundamentals. As a result, these high-quality companies tend to be trading at a premium multiple compared to the broad market or peers’ group.
Members will recognize some of the names that we cover in our Model Portfolios and coverage lists such as Constellation Software Inc. (CSU), Thomson Reuters Corp (TRI), and Magna International Inc. (MG).
A quick reminder is that investors should not consider receiving US dividends as the sole reason to invest in a company. Instead, investors also need to take into account the company’s fundamentals, track record, and valuation to make sensible investment decisions. Investors can view our previous screener blog here.
Take Care,
Disclosure: The analyst(s) responsible for this report do not have a financial or other interest in the securities mentioned.
