Multiple sources on the internet including a Globe and Mail Investor column, MyOwnAdvisor.ca, CanadianCapitalist.com and DividendEarner.com have listed Canadian companies who pay their dividends in US currency. I happened to own several of them including two Brookfield Asset Management listings (BIP.UN and BEP.UN) and Algonquin Power (AQN.T). Accordingly I requested my discount broker to move the shares of these stocks to the US side of my accounts, thinking that I was saving money on currency conversion. As it turns out, this was only partially correct. Algonquin Power does actually pay its dividends in US dollars and each quarter, I have been receiving the exact amount of US cash that I expected to, based on their posted rate multiplied by the number of shares that I held.
First I confirmed that the assertion was true by finding the latest published quarterly yield for my stock which I then multiplied by the number of shares that I held. For example, I have 353 shares of BEP.UN in the US side of my TFSA account and the rate of payout for March was USD 0.515. Accordingly I expected to be paid $181.80 USD. Instead I was only paid $176.82 with the difference being attributed to conversion fees. The net difference was even larger in my husband's RRIF account where he held significantly more shares of BIP.UN. Next I wanted to understand why this was happening and where the double conversion was taking place.
I looked on the Brookfield Dividend Page and found this disclaimer at the bottom. The first sentence is what probably led to the widespread misunderstanding.
I phoned Scotia iTrade to find out whether it would be possible for me to request Brookfield to pay my dividends in US dollars. What I was told was that Brookfield was not paying me (or any other investor directly). They were paying the discount broker, which is a Canadian corporation and therefore the payouts from Brookfield are in Canadian dollars. So it makes absolutely no sense for me to hold these stocks in the US side of my account, incurring a conversion fee each time a dividend is paid. I asked iTrade to move my Brookfield stock back to the Canadian side of my account, but I worry about all the misinformation that is still out there about Brookfield. I will try to contact some of these websites to make them aware of the situation and ask that Brookfield be removed from the list of "Canadian companies paying US dividends", or at least clarify that they do not pay this to Canadians!
On the other hand, Algonquin Power does pay its dividends in US dollars regardless of whether they are paying a Canadian or American resident. I will now count on it to generate US cash dividends that I can use to spend.
Note: Since posting this blog entry, I have received comments from several people who indicate that they do receive the full US dividend from Brookfield on the US side of their account. BMO Investorline seems to pay out in full and one person even indicated TD Direct Investing, even though I heard that others from TD were charged a currency conversion fee. I haven't figured out what the deciding factor is. I guess the take-away from all this is that you should double-check with your own discount broker. I plan to ask mine why we are being charged a fee at Scotia ITrade while other discount brokers do not.