Why U.S. dividend stocks make sense for Canadians

Sector diversification is a big plus, even though there are no tax advantages.

Andrew Hepburn 22 May, 2018 | 5:00PM
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It's a well-known adage that you shouldn't place all your eggs in one basket. For Canadian dividend investors, this suggests looking beyond the country's borders for yield. Fortunately, you don't need to look very far: The U.S. equity market offers many dividend possibilities.

There are a few arguments for Canadian investors to own some U.S. dividend-paying stocks. For one, such a strategy provides geographic diversification. Should the U.S. economy outperform Canada's, for instance, U.S. equities may help offset weakness north of the border.

Another strong rationale for owning U.S. dividend stocks is Canada's highly concentrated equity market. Doug Porter, chief economist of BMO Financial Group, notes that Canada is over-represented in materials and energy, and in financial services to some extent, and reasonably represented in telecommunications.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Amazon.com Inc3,416.00 USD1.06Rating
CVS Health Corp84.86 USD1.19Rating

About Author

Andrew Hepburn

Andrew Hepburn  Andrew Hepburn is a freelance financial writer based in Toronto. He writes about investments, market trends and personal finance. He has written for Maclean's, the Globe and Mail, RateHub.ca and Canadian MoneySaver.

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