Canadian Dividend Investors
1
Own Canadian Companies
Invest in what you know.
1
Peter Lynch
The most important reason you should concentrate your investments in Canadian public companies, in my view, is because Canadian public companies and stock markets are subject to much stricter regulation and oversite by government agencies, as compared to many other countries, including the United States.
In addition, you or one of your friends may be a customer or an employee of one of the major Canadian public companies. In any case, it is relatively easy to get reliable financial information on public companies headquartered in Canada. In addition, any unusual events that might affect a Canadian company's financial prospects will be quickly reported by the media.
Another important advantage of receiving dividends from qualified Canadian companies is that the Canada Revenue Agency offers a significant tax credit on eligible dividends, as indicated in the adjacent table. Note that for illustrative purposes, I have assumed that the only source of income is from dividends. Your actual tax savings will be different from those shown here, depending on your total taxable income, including income from all other sources, aside from dividends.
Finally, it is worth noting that dividends received from foreign companies will be affected by changes in currency exchange rates, which may have a positive or negative effect on the purchasing power of the dividends you receive. Changes in exchange rates are unpredictable and therefore the purchasing power of dividends paid by foreign companies are also unpredictable.
1. Lynch, P. 1989. One Up on Wall Street: How to Use What You Already Know to Make Money in the Market. Simon & Shuster Paperbacks, New York, NY.