Some of the key financial/economic events from this year are shown in this infographic below:
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Source: Schroders
Dutch Dividend Withholding Tax Rates For Tax Treaty Countries
The Dutch dividend withholding tax rates for treaty countries for 2015 is listed in the table below:
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Source: Invest in Holland
To check the tax rates for all countries click the above image to open the table in pdf format.
For US residents Holland charges 15% in taxes on dividends paid out by Dutch companies.
Download: Dutch Dividend Withholding Tax Rates For Tax Treaty Countries 2015 (pdf)
Japan Dividend Withholding Tax Rates For Tax Treaty Countries
The Japan dividend withholding tax rates for treaty countries for 2015 is listed in the table below:
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Source: Mizuho Bank
For the tax rates for all countries click the above image to download the table in pdf format.
How to use this table?
If you are Canadian resident and hold Japanese securities, Japan will withhold 15% taxes on dividends paid out by Japanese companies.For Chinese residents the rate is lower at 10%.
Download: Japan Dividend Withholding Tax Rates For Tax Treaty Countries 2015 (pdf)
Comparing Australian Dividend Yield and Payout Ratio To Other Countries
Dividend yields and payout ratios vary across countries. In the developed world, most countries other than Japan and the US tend to have good dividend yields. In emerging markets, certain countries like Chile, Taiwan have high yields while places like South Korea, India, China, etc. have low yields.
The chart below shows the dividend yields by country as of September, 2015 based on MSCI indices:
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Source: Investing in Retirement Using a Global Dividend Income Strategy, Thornburg Investment Management
Australian firms’ yields are nearly double that of the U.S. firms.
It is not just that the dividend yields are high in Australia. The payout ratio is also the highest in the world. The following chart shows the payout ratio of Australia and select developed countries:
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Source: Alpha Beta Strategy and Economics via Australia’s dividend doom loop, Macro Business
Australia firms are now paying 63c in every dollar earned to their shareholders in the form of dividends. This is up from 40c a decade ago.
Compared to other countries, Australian companies pay a higher share of their earnings to shareholders. For example, top British firms pay out just 50c in every dollar earned. U.S. firms listed on the NYSE pay out a pathetic 29c for every dollar.
The takeaway here for US income investors is that they should beyond the borders for better income stocks that simply sticking with American firms. As most US firms are not growing greatly and still continue to withhold more than three-fourths of every dollar in profits, it is wise to expand one’s horizons and invest in high-quality foreign stocks.
Currently 11 Australian companies are listed on the NYSE and more than 210 trade on the OTC market. In addition, many ETFs and mutual funds also provide access to the Australian equity market.
Global Investors Wrongly Consider Canada As Another Saudi Arabia
The S&P is down 0.97% year-to-date (YTD).Canada’s benchmark S&P/TSX Composite Index on the other hand has declined by 10.6% YTD making it one of the worst performers in the developed world.
The rout in commodity prices and crude oil prices has spooked global investors. These investors have taken a negative view of Canadian equity market.
The following chart shows the correlation between oil prices and non-resource stocks:
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Source: A Not-So-Sweet ‘16, CIBC
The chart shows that there’s been a rising correlation between oil prices and non-resource stocks which include stocks that actually benefit from lower oil prices or the drop in the C$ that oil prices have helped engender.
According to the author Avery Shenfeld, this chart shows that investors are starting to see Canada as another Saudi Arabia. He also noted Canadian stocks to be attractive from a valuation standpoint. From the report:
That’s a sign that global investors are starting to see Canada as another Saudi Arabia, a gross overstatement. So too has been the widening of the PE discount on TSX non-resource stocks relative to their S&P 500 counterparts that trade at a multiple some three points higher. Our model, driven off Canadian and US growth, interest and exchange rates, points to a return to moderate gains in non-resource corporate revenues in 2016 (Chart 3). Although some importers will see a margin squeeze, more broadly, non-resource sector firms should see at least some margin improvement on sales generated in US dollars against costs in Canadian dollars. Resource stocks need a better global backdrop, but the rest of the TSX now looks attractive from a valuation perspective.
I agree with Avery’s assessment. Canada is more than just oil and other commodities. The chart below shows the sector composition of the TSX Composite:
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Source: S&P
Energy constitutes only about 19% of the index. However investors not only sold energy names but also financials and others. With respect to financials, investors fear banks’ exposure to the energy industry. But this fear may be unfounded. Though banks have exposures to energy sector, they are well diversified and a bust in the energy sector is not going to derail them completely. So investors with a long-term view can consider adding non-energy Canadian stocks at current levels.
Some of the Canadian stocks that offer long-term opportunities include: Bank of Montreal (BMO), Bank of Nova Scotia (BNS), Royal Bank of Canada (RY), Toronto-Dominion Bank (TD), Canadian National Railway Co (CNI), TELUS Corp (TU), BCE Inc (BCE), etc.
Disclosure: BMO, BNS, EY, TD, CNI