TD Waterhouse - US Stocks & Dividends

[Kaitlyn]

I have a self-directed RRSP at TD Waterhouse

I called in and asked regarding US securities as I only seem to have a CDN balance.

They said they can set it up so when you sell a US stock, it can go into a US money market fund.

However, they said for something like dividends, those would get converted every time.

Is there any way around this? I'd like to buy some US dividend stocks, but it seems that the RRSP doesn't really support it, which I'm finding rather weird...

[brunes]

I have a self-directed RRSP at TD Waterhouse

I called in and asked regarding US securities as I only seem to have a CDN balance.

They said they can set it up so when you sell a US stock, it can go into a US money market fund.

However, they said for something like dividends, those would get converted every time.

Is there any way around this? I'd like to buy some US dividend stocks, but it seems that the RRSP doesn't really support it, which I'm finding rather weird...

TD does not support holding USD in your RSP. You will have to move to another broker that allows this, like Questrade or QTrade, if you want to do so without paying extra fees.

I have a RSP at Questrade specifically for this purpose, to hold my US dollar dividend-producing investments.

It's really dumb and I hope TD wakes up and smells the coffee someday that they are losing a lot of business over this.

[ccyk]

RBC let you hold USD & CAD balance at the same time in RRSP account
many others also let you hold and receive USD directly, TD just sucks in this area

[Kaitlyn]

TD does not support holding USD in your RSP. You will have to move to another broker that allows this, like Questrade or QTrade, if you want to do so without paying extra fees.

I have a RSP at Questrade specifically for this purpose, to hold my US dollar dividend-producing investments.

It's really dumb and I hope TD wakes up and smells the coffee someday that they are losing a lot of business over this.


Hmm.. I'm guessing I could just keep my TD RSP and open a Questrade USD RSP specifically for this? I'd rather not split it up.. just easier to maintain... :(

Given that I currently have a USD dividend stock in a non-registered account, I suppose it's still best to transfer/hold that in the TD RSP rather than just keeping it in the non-registered?

[S5]

Is there any way around this? I'd like to buy some US dividend stocks, but it seems that the RRSP doesn't really support it, which I'm finding rather weird...

If you DRIP the dividends I *think* you will avoid the forced currency conversion. That would leave only the small residual amount to be converted. Hopefully someone out there can confirm.

TDW just can't seem to find the technical solution to their antiquated system. My guess is they will only offer true USD RRSPs once they've moved to a new platform.

[S5]

Given that I currently have a USD dividend stock in a non-registered account, I suppose it's still best to transfer/hold that in the TD RSP rather than just keeping it in the non-registered?

This is a very minor cost, IIRC TDW charges a 1.5% currency exchange fee. Assuming your stock pays a 4% dividend, that's a 0.06% drag on your yearly return.

Assuming you have the space then yes, put it in your RRSP. You'll avoid US dividend withholding as well.

[brunes]

Hmm.. I'm guessing I could just keep my TD RSP and open a Questrade USD RSP specifically for this? I'd rather not split it up.. just easier to maintain... :(

Yep, that is what I do.. there is no limit to how many RSP accounts you can have. You just gotta make sure you keep track of your contributions so your TOTAL across all accounts is not over your limit.


This is a very minor cost, IIRC TDW charges a 1.5% currency exchange fee. Assuming your stock pays a 4% dividend, that's a 0.06% drag on your yearly return.

It's a minor cost if only considering dividends, but overall it adds up quickly. You also have to consider that you also lost that 1.5% on your initial purchase, and 1.5% every time you purchased more shares. Then you will also get hit AGAIN every time you sell shares! That's 3% right off the top that you have to earn in gains just to break even on the stock not accounting for any currency movements.

[Cerenity]

BMO allows USD holdings also.
i've complained to TD numerous times and made it clear it's the main reason why they wont get my business.

you not only save the FX on dividend payments, but it also allows you to convert new CAD funds to USD at much smaller cost by buying/selling dual listed stocks

as for DRIP, i dont know about TD, but last time i checked, BMO does not support DRIP for US stocks, only certain canadian ones.

if you dont plan on buying/selling too often, just live with it for now. i dont think they'll leave it like this for too long. eventually they'll want to remain competitive

[S5]

It's a minor cost if only considering dividends, but overall it adds up quickly. You also have to consider that you also lost that 1.5% on your initial purchase, and 1.5% every time you purchased more shares. Then you will also get hit AGAIN every time you sell shares! That's 3% right off the top that you have to earn in gains just to break even on the stock not accounting for any currency movements.

Come on now, let's not get crazy. Norbert's gambit is easily accomplished online in TDW RRSPs, rendering the currency exchange cost all of $19.98. On selling the proceeds go into the US$ MM account so long as you've registered for automatic wash trading. Costs other than on the dividends are the same as anywhere else.

[brunes]

Come on now, let's not get crazy. Norbert's gambit is easily accomplished online in TDW RRSPs, rendering the currency exchange cost all of $19.98. On selling the proceeds go into the US$ MM account so long as you've registered for automatic wash trading. Costs other than on the dividends are the same as anywhere else.
It's an awful lot of hassle to go through just to have the divine privilege of holding your stocks at TD... I don't see why anyone would want to put up with all this hassle when they can just move their money elsewhere.

[Allen32]

I have US holdings in my account and do the following:

I have asked TDW to setup wash trades and DRIP on my SDRSP account
When the Canadian dollar is high I purchase dual listed TD or RBC (when on rise of course) on TSX
When the stock on the US side rises I sell on NYSE at a higher profit then the purchase (to recoup my commissions)
The funds automatically get converted to a US Money Market account
I purchase my US securities which are automatically deducted from the US Money Mkt account to fund the buy
Dividend payments are made in US funds but converted to CAD and the DRIP is purchased (0.98 conversion)
As an example of cost hit on DRIP: I get a $128USD div payment and then it costs me $2 hit on the DRIP (0.015)



So I do incur buy/sell commissions and a small hit on conversion for div payments but I don't loose sleep over it and it's not all that complicated.

Agree that TD need to get out the dark ages... It would avoid any need to mess around like this. PIA

[S5]

It's an awful lot of hassle to go through just to have the divine privilege of holding your stocks at TD... I don't see why anyone would want to put up with all this hassle when they can just move their money elsewhere.

Well, most folks don't work for a US company and don't have US income so they're going to have to convert funds no matter who their broker is. You could have just contributed your USD stock in kind into your RRSP, not sure what extra hassles you're referring to.

Of course I agree they should be able to get this done. I use to think it was from lack of will but that ship has sailed, they know this is costing them assets. They just can't seem to get USD integrated in their old system. They've been saying it's coming for over a year now. Let's hope they can get a new, more modern system up soon. There are other issues with TDW's outdated platform: lack of proper real time performance accounting for one.

For those who might be intimidated about doing NG, don't be, it's ridiculously easy inside RRSPs*. Just use your CAD$ to buy an interlisted stock(RY works) on the TSE. Immediately sell the stock on the US side. That's it, you've converted CAD$ to US$ for the cost of 2 commissions. You can now buy whatever US listed stock or ETF you desire.

*Once your TDW SDRSP account has been opened, call in and tell them you want automatic wash trading.

[S5]

I have US holdings in my account and do the following:

Dividend payments are made in US funds but converted to CAD and the DRIP is purchased (0.98 conversion)
As an example of cost hit on DRIP: I get a $128USD div payment and the it costs me $2 hit on the DRIP (0.015)



Ugh, that sucks, thanks for the info. I have a couple family accounts setup like this but would only have found out the answer at year end dividend time. The cost is minor but I don't see why it needs to happen.

Shouldn't you get charged twice for currency conversion in this case? Once from US$ to CA$ on the div payment and then the other way around on the purchase of new shares. From your post it doesn't appear this is happening but still, annoyed by any conversion on same currency DRIP.

[Allen32]

Shouldn't you get charged twice for currency conversion in this case? Once from US$ to CA$ on the div payment and then the other way around on the purchase of new shares. From your post it doesn't appear this is happening but still, annoyed by any conversion on same currency DRIP.

Not sure but here is the last transaction for MRK:


09-Jul-2012 300 MERCK & CO INC-NEW CONVERT TO CAD @ 1.00250 DIV $0.00 $126.32
09-Jul-2012 3 MERCK & CO INC-NEW DRIP $0.00 -$128.37

I don't think it is fully settled yet so will update post if there are additional entries. There weren't any for CHV on last payment. Canadian Capitalist mentions this in an article in section Synthetic DRIP though I am not clear if he includes TDW as a reference to the comment:

Synthetic Dividend Reinvestment Plans (DRiPs) offered by many discount brokers allow investors to reinvest dividend payments into whole shares of a stock or ETF. It turns out that when you sign up for a DRiP offered on a US-listed stock or ETF, any dividend payments are held in US dollars and used to purchase whole shares of the stock or ETF. The exchange rate on the US dividends and the stock purchase are set to the same value, effectively eliminating USD-CAD conversions.

The full article is here (http://www.canadiancapitalist.com/how-to-avoid-currency-conversions-on-us-dividends/).

[S5]

I thought I had read that DRIPed dividends did not get converted, thanks for refreshing my memory.

Did you actually see your cash balance or dividend residual diminish from this purported conversion or are you just basing it on their clunky transactions list? I wouldn't trust anything the transaction history tells you with regards to US$ transactions in a RRSP. When I performed NG a few months ago the transaction history was a mess, filled with purported currency exchange at various rates. When I double checked the actual numbers, no conversion had been done by TDW on any transaction, I got the exact amount of US$ from the exact amount of CA$ I should have based on RY's quotes at the time.

[Allen32]

@S5: Honestly I couldn't figure out the convuleted transaction report mess either but in my math it appeared that it was very close to the daily conversion rate and not TD's posted rate. However, I must admit, I sell my US$ at a premium when I do this so I effectively got more US$ in the money market account then what I had expected.

[rjane]

I have spoken with TD and they confirmed that US dividends were subject to Fx charges both ways in a registered account because it is a synthetic drip. Based on comparing the conversions I experienced over the last year compared to the bank of Canada noon rate for US dollars the currency conversion cost is 1.7% over the spot price each way. As 80% of my equity holdings are in VEA, VWO and VTI this has meant I have paid approximately $200 in hidden fx charges due to the fact that TD cannot handle US cash in their registered accounts. I am now seriously considering switching to a discount brokerage that can allows US dollars in registered accounts.

[Jungle]

What about non-registered accounts? Do they force convert US dividends too?

[notbill]

What about non-registered accounts? Do they force convert US dividends too?

Not in the USD non-registered account, no. Yes if you had US listed stocks in the CAD non-registered account, but not sure why you would do that.