Thursday, August 30, 2012

Toronto-Dominion Bank Increases Dividend

TD announced the next quarterly dividend will be Canadian $.77 per share which is a 6.94% increase over the previous payment.  This is the second boost in 2012 and the second consecutive year of dividend growth since the freeze in 2010.  Overall the company has been paying dividends since 1857 which is the third longest streak in Canada (only bested by BMO and BNS).  In general I am not a fan of bank stocks, but do feel comfortable holding Canadians.  I see major flaws in the American banking system and am more apt to trust the policies of our friends up north.  The payout ratio now stands at about 47% leaving room for future dividend growth if the company chooses to do so.  I anticipate TD being a solid dividend investment and plan to buy more shares.


  1. Do you know the tax implications (if any) of owning a Canadian investment as a US citizen/taxpayer?

    I've heard that some foreign securities (such as ones from the UK like VOD) have a favorable tax agreement such that owning them is no different from owning a US stock. I imagine CAD stocks would be the same way.

    On the other hand I believe that may not be the case for French stocks like FT based on comments I've read on other blogs.

    Have you ever found any resources that detail these sorts of considerations?

    1. Executioner,

      If you hold Canadian stocks in a taxable account the dividends will be subject to a withholding tax. The last time I looked it was 25% which is very steep. The good news is that if you hold a Canadian CORPORATION (not royalty trust) in a IRA/ROTH IRA we have a tax treaty and nothing will be withheld.

      I hold TD and EIFZF in my ROTH, nothing has ever been withheld.

      Unfortunately I don't have a resource explaining the tax situation, but I know from personal experience this is the case. I've held EIFZF for over a year and TD for about 4 months. The dividends have always been what I expected subject to exchange rates.

      Hope this helps.


    2. Oh and I'm currently only considering foreign stocks from Canada and the UK to avoid the whole tax fiasco. I'll probably end up owning UL or BP at somepoint and could even put those in my taxable account!

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