Thinking About Moving To Canada? Think Again

Schadenfreude

Schadenfreude: The pleasure we feel when we see others suffer. 

Get ready to feel good! Because if misery does love company, the economic and personal financial pain Canadians are feeling might ease the brunt of the copious amounts of bad news stateside. 

We’ll get to Canada’s scary data, but first potentially good news from north of the border for US investors. 

A Well-Positioned ETF To Consider

Source: Google Finance 

In our proprietary Trackstar database of the tickers investors are searching for, the iShares MSCI Canada ETF (EWC) ranks #1 by a wide margin. Year to date, EWC has significantly outperformed the S&P 500 (SPY) and Nasdaq 100 (QQQ) indices. 

Maybe a small surprise, but hardly shocking given the fund’s concentration:

• Financial energy, materials, and industrial stocks comprise more than 75% of EWC’s portfolio. 

The present economic environment – high inflation, rising interest rates, possible recession – draws investors to these sectors. As you’ll see, Canada is hardly immune to these pressures. And it just so happens that some of the country’s biggest companies run in the aforementioned spaces. 

Behold EWC’s top five holdings and how they’ve fared over the last year. 

Source: Google Finance 

Those five stocks – Royal Bank of Canada (RY), Toronto-Dominion Bank (TD), Canadian National Railway (CNI), Enbridge (ENB), and Bank of Nova Scotia (BNS) – account for roughly 27% of EWC’s holdings. All five names have held up relatively, if not remarkably well over the last year. There’s even some green there. In this market, that’s an accomplishment in and of itself. 

You can buy all five stocks – individually – on the New York Stock Exchange, using the tickers listed here. 

Just an idea to consider if you’re looking to diversify your portfolio amid this turbulence. 

Too add more sweetness to the pot before you embark on further due diligence. Pretty much across the board, these five Canadian stocks pay impressive dividends. 

The Juice thinks the high yields you see here aren’t yield traps, rather they’re a reflection of low and attractive valuations: 

• RY: p/e ratio, 11; dividend yield, 4.1%
• TD: p/e ratio, 10.5; dividend yield, 4.3%
• CNI: p/e ratio, 22; dividend yield, 2%
• ENB: p/e ratio, 19, dividend yield, 6.3%
• BNS: p/e ratio, 9, dividend yield, 5.5%

Quick note: Canada slaps a 15% tax on dividends paid to US investors. However, they’ll waive it if they’re paid out inside retirement accounts. Plus, you’ll receive all of the tax benefits the IRS bestows on investment proceeds held in a retirement account. 

You’re best off hitting up your tax person to cover the ins and outs of taxes as they pertain to international investing and your specific situation. 

Anyhow… 

If you crave more information on Canadian stocks, subscribe – for free – to our sister newsletter, The Bacon. Each day, The Bacon curates news and insights for Canadian investors from our 100+ financial media partners and delivers them to your inbox in a neat and polite little package. 

Now, for some Schadenfreude, scroll with us.