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I am tempted to buy some american stocks as some of their dividend yields are high.
I know in a regular margin account, you get taxed the american 15% withholding and then Canada treats it like normal income (no special treatment like the canadian dividends)

So I thought, why not hold these instruments in your TFSA.

This won't stop the Americans from taking their 15% of the dividend distribution (Although they are okay with the RRSP)
but Canada won't tax it further.

For instance, and this is just an example, I haven't researched this one, just looked for a company with a big yeild, Gamco Global (GGN) which yields 17% with monthly dividends. If Americans take off 15%, that leaves 14.55% for you which is tax free.

I realize that a lot of the american stocks have slashed their dividends but the biggest yields may come back with the safer companies. Just looking for a way to take advantage of this. What's your opinion? How would you tweak this?
 

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My ideas. Because of those US withholding taxes of 15%, I would look at well performing stocks that don't pay a lot of dividends. I know some of the tech stocks are in that category.

Unless you need monthly income.
 

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My ideas. Because of those US withholding taxes of 15%, I would look at well performing stocks that don't pay a lot of dividends. I know some of the tech stocks are in that category.

Unless you need monthly income.
yes, looking for Monthly income. Looking for a snowball effect :) Of course, I would be doing this with medium risk stocks that have kept their dividends going. Do you think this would be a good way to use the TFSA?

Not looking to use RRSPs as I see what its like when you try to widthdraw. Its like you are leasing your money
 

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yes, looking for Monthly income. Looking for a snowball effect :) Of course, I would be doing this with medium risk stocks that have kept their dividends going. Do you think this would be a good way to use the TFSA?

Not looking to use RRSPs as I see what its like when you try to widthdraw. Its like you are leasing your money
Yes. US stocks should be in the TFSA for the reasons you cited and agree that would work well for income. 17% sounds like a high yield for that stock. Did the price really fall? Be careful it isn't some ROC - return of capital - too.
 

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Yes. US stocks should be in the TFSA for the reasons you cited and agree that would work well for income. 17% sounds like a high yield for that stock. Did the price really fall? Be careful it isn't some ROC - return of capital - too.
Relatively, wasn't much movements for the year, even in March. It's high-low was $4.74-1.98 for 52 weeks. Looking at the past 10 years it slashed its dividends a few times (From $0.12 at its highest to $0.05/month). It invests in Gold and natural resources and then does covered calls on them. It's more of an income fund then a true stock. As far as I can see, there has always been a payout. Need to do more research but this was more for an example. Although, I'm looking hard at anything Gold right now :)
 

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ok. You just have to be wary of the high yields as sometimes they are just returning your capita - ROC as much as paying dividends. Check the 'distributions' to be sure they are cash and not 'non cash' which is selling part of the stock itself ( ROC )

You see this w high yield ETFs a lot.
 

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I hope you are confident about their future.

If you had bought 100 000$ worth of their shares (10 000 shares) back in 2014 when their share price was 10$ with a dividend of 0.09$/month, which is about 10.8% yield on cost, you would be now in 2020 with your 10 000 shares reduced to a value of 30 000$ and the dividend is now 0.03$/month which is about 3.6% yield on cost from you investment back in 2014, so your capital would've decreased and your fixed income would've decreased. It's even worst if you had bought in 2011.

I'm an inexperienced trader, so I may miss a point and I'm confident you are doing your due diligence before buying.
 

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I hope you are confident about their future.

If you had bought 100 000$ worth of their shares (10 000 shares) back in 2014 when their share price was 10$ with a dividend of 0.09$/month, which is about 10.8% yield on cost, you would be now in 2020 with your 10 000 shares reduced to a value of 30 000$ and the dividend is now 0.03$/month which is about 3.6% yield on cost from you investment back in 2014, so your capital would've decreased and your fixed income would've decreased. It's even worst if you had bought in 2011.

I'm an inexperienced trader, so I may miss a point and I'm confident you are doing your due diligence before buying.
This stock I just found for an example of current high yield. I have done very basic research on this. You're right, I'm not making any decision without due diligence.

My question was what everyone thought about holding an American stock in a TFSA. If there was something I'm missing. I noticed that American stocks had higher yield so it might be good to hold it in the TFSA in spite of the 15% withholding tax.

Although I'm bullish on gold, I'm here to learn so I will listen with ears wide open.

Is there another forum for discussing just stocks?
 

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American stocks have lower yield, as a rule. The yield of the S&P 500 is around 2%, while the yield of the TSX is 3.43% (based on the 12 month trailing yield of XIC, which is a Canadian index fund).

Buying stocks based on their yield being high can be risky.

In the TFSA you pay the US withholding tax, as you were aware. In the taxable account, you get a foreign tax credit that offsets the withholding tax, but you do get taxed on the dividend itself. If your TFSA has enough room for all your investments and you are investing in the taxable account anyways, then it might make sense to put your American stocks in the taxable account. You would have to weigh it against what else you might be holding.

As a standalone question, should it be in my TFSA or not, the answer would be if you have room in your TFSA then it should be there. If you don't have room the question is a lot more complicated.
 
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