The following post is written by Brian So, a financial advisor and blogger at www.aafsinsurance.com. Image credit: magcom / 123RF Stock Photo While my previous posts focused on the impact of withholding tax on dividends paid from the US and foreign companies, I realize that most people have a high concentration of their portfolio in the Canadian market. Therefore, to wrap up my mini-series on dividends, the last topic will be on dividends paid by Canadian companies. Don’t worry, there won’t be any complex withholding tax rules discussed in this post. Dividends are payments made by corporations to their shareholders. Because dividends are paid out of after-tax profits of corporations, the individual shareholder receives preferential tax treatment to offset double taxation. This comes in the form of the gross-up and non-refundable dividend tax credit. At first glance, the gross-up may seem disadvantageous because it appears you are paying tax on money you didn’t receive. But tax relief ...

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The following post is written by Brian So, a financial advisor and blogger at www.aafsinsurance.com. Since my last post generated a lot of interesting discussion on which account to hold US stocks and ETFs, I’ll follow it up with a post on the impact of withholding taxes of holding international (non US) dividend stocks in different accounts. Canada does not just have tax treaties with the US with respect to dividends paid to Canadians from US stocks. We also have tax treaties with 89 other countries in force and treaties signed but not in force with about a dozen other countries. What this means is that dividends received from shares of companies in these countries will also be subject to withholding tax, depending on which account you hold these shares in. You would be able to claim the foreign tax credit (FTC) to recover the amount withheld, but only in non-registered accounts. By far the most common amount withheld is 15% of the gross dividend paid out, although there are a few exceptions, ...

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Do You Know the Future? Another year has nearly passed us by, with all kinds of changes and shifts in global markets. That is certainly nothing new when it comes to investing. Going forward there looks to be more uncertainty to follow, much of which will hinge on the resolution to the Fiscal Cliff in Washington. Of course, it’s the surprise events that no one sees coming that take the biggest hit to investors. The Financial Crisis of 2008 and 2009 is an obvious example. This year the sudden slow-down in China hit oil and gas producers as well as other resource companies. On the other hand, American and European stocks have been soaring! Are we in a long run bull market, or are stock prices topped out and set to tumble? What is the global outlook for 2013? When will interest rates rise? The correct answer is, and the only one that should come immediately to mind is, “I don’t know” or “who knows?” Do You Have a Plan for 2013? With nothing but uncertainty to follow, I believe the ...

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[easyazon-image-link asin="B009CXTH5K" alt="Dividend Growth: Freedom Through Passive Income Canadian Edition" src="http://ecx.images-amazon.com/images/I/41piNgpg56L.jpg" align="left" width="250" height="374"]During the Financial Bloggers Conference (FinCon12), Mike from the Dividend Guy was super-excited to let me know he just launched his new eBook, Dividend Growth: Freedom Through Passive Income. This eBook is available through Amazon Kindle, with both a [easyazon-link asin="B009CXTH5K"]Canadian Edition[/easyazon-link], and a [easyazon-link asin="B009CXT8AY"]U.S. Edition[/easyazon-link]. I plan a review for the future, but for now I just wanted to get the word out to readers. This eBook looks absolutely amazing! I’ve just perused the copies that Mike sent me for review and I’m impressed with what I’ve read so far. This is a 139 page in-depth analysis of dividend stock investing. Mike describes his book as: A master class in the actual methods utilized by financial professionals ...

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Life isn’t perfect and for whatever reason we purchase stocks we shouldn’t have bought, lured in by the high yield, or still hang on to stocks we should have sold. Investor confidence in a company can be sudden and swift. In the case of TransAlta Corp (TA) for example (which I don’t own) this was pointed out in a recent post by John Heinzl. Management decisions over the sale of the  Sundance coal plants, and the looming threat of a dividend cut, have pummelled the stock price. TA closed at $16.81 per share today, down -20.5% from a recent high of $21.15 per share on February 26th. Back in October, TransAlta was trading over $23 per share. As well as the dividend yield now close to 7%, investors have also been concerned with TransAlta’s high dividend payout ratio at 89.2%, which is high even for a utility – it used to be over 100%! Pengrowth Energy (PGF), a smaller oil and gas producer with a crashing share price (one of my smaller holdings), has left the dividend yield ...

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