As a Canadian, I held two publicly traded stocks on the US stock exchange to build US funds to earn dividends in US dollars. If currency exchange is not at the same level, this is a way to generate cash in US dollars. Mostly when the dividend paid is already in US dollars.
The process of transferring a share through the stock market is called ‘Write diary’. This is a term used by discount brokers to refer to switching listed stocks between exchanges.
The bottom line is you can hold Canadian blue chip companies in US currencies that generate US dividends. I have had many readers asking me how to do this as it is a way to bypass currency fees to some extent.
Before getting into the process, make sure that your discount broker supports it and that you have a proper US money account. Many discount brokers such as RBC Direct Investing or TD Direct Investing already support this.
Connected: Norbert Gambit with DLR and DLR.U.
Double listed stocks
First of all, you need a company that trades on both exchanges. Most of Canada’s blue chip stocks are listed on both the TSX and NYSE. If you think about it, a Royal Bank stake in the TSX is the same as a stake in the NYSE from the perspective of owning a piece of the company.
Note that income tax rules differ depending on where you live and where the dividends come from (not the dividend currency).
Connected: Dividend taxes
Benefits of Listed Stocks
One main advantage is that you can choose to earn dividends in any currency. Currently, my RRSP account for my dividend portfolio is mostly in US currency. The main reason is that no withholding tax is levied on dividends for foreign dividends (excluding MLPs) in an RRSP.
A note on investing in US companies:
- The US is a big market with many large conglomerates that are internationally known.
- Engagement in new sectors with little representation in Canada.
A secondary benefit is that companies that pay in USD, such as Brookfield Asset Management or Thompson Reuters, do not incur any exchange rate fees. Below is a comprehensive list of the stocks you can use. To do a direct currency exchange, I just use DLR and DLR.U as there are very few fees.
The process of buying on the TSX and transferring your shares to the NYSE (and vice versa) is known as “journaling” your shares to the other exchange.
Once your transaction is complete, which will take 2 days, you can ask your discount broker to journal your Canadian double-listed stocks.
It’s free with RBC Direct Investing and they adjust the book value for accounting too. Other discount brokers may incur a fee and you should inquire.
Discount broker requirements
To effectively manage US stocks in your portfolio, you need caution as a precaution. You need accounts with two currencies.
Make sure your discount broker provides these (and no fees if possible). Otherwise, you will lose many of the benefits associated with holding US investments.
Connected: Discount broker review
Canadian stocks with dual listing
Below is a list of all of the Dividend Snapshot Canadian Screener’s stocks that are also traded on the NYSE, sorted by market capitalization. A large portion of my portfolio is invested in US companies, and therefore US dollars, for the simple reason that the US is a much larger economy than Canada.
The table above shows the subset of stocks that are double-listed in USD, while the following table shows the stocks that are traded on both exchanges.