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Algonquin Power & Utilities Corp (AQN)

58K views 304 replies 51 participants last post by  AltaRed 
#1 ·
Wondering if anyone holds this?
Seems like it has performed well over the past few year.
The P/E is high at 30 but it also has a beta of 0.17 and a 5.16% dividend.

I have not had the chance yet the comb through the financials yet, but wondering what you guys think about it?
 
#40 ·
If I have AQN in a Canadian account, set to drip, will I pay 2x FX per drip?

My USD AQN is dripping nicely but I've been concerned about the FX so I haven't set it up for my CDN holdings.
 
#41 ·
Since it is the same stock wherever it is traded, and issues dividends in USD, why would you hold some on the CAD side of your account? Hold it all in the USD side of your account.
 
#43 ·
FWIW, I hold AQN on the USD side of my Scotia iTrade cash account and the USD dividends are deposited 'in whole' into the account. No conversion to CAD and then back to USD. I watched closely for the first dividend to make sure this was the case. I don't DRIP but I assume (could be dangerous) that if I did DRIP, the USD dividends would be used to buy AQN shares on NYSE and not TSX.
 
#44 · (Edited)
the above sounds good but the problem is that tomB is asking about FX on DRIP shares if he holds the shares in canadian account.

with a holding in CAD account, there would also be broker FX fees on the AQN dividends themselves, i believe.

possible FX fees on DRIP shares could be charged if algonquin uses a DRIP plan administrator located in the US, as was happening with potash. All would depend on where the new DRIP shares would be purchased.

i believe that, to get an accurate answer, tomB would have to inquire from AQN shareholder relations. Offthetopofmy head though, based on what tomB says about his USD DRIPPing, it looks as if AQN does have an american DRIP plan administrator.

i'm left wondering why bother with holding & DRIPPing AQN in canadian account, when USD account is working so well. Is it perhaps a case of registered vs non-registered holdings & tomB's broker is one of those who have not yet offered dedicated USD registered accounts.


.
 
#45 ·
I am aware of what Tom is trying to do..... I am suggesting he keep it on the USD side of his account (seems he already has AQN somewhere in a USD account). If his brokerage doees not yet have a USD side to his account, it may be time to change brokerages, or just accept there could be a forex fee.

I do agree with you he should talk to his brokerage AND most likely AQN Investor Relations.
 
#46 ·
I appreciate the help. Thank you.

I have a bunch of accounts at TDDI and some of them don't have American sides. It is not possible to reduce the number of accounts. Not all of the accounts have US sides, or I would journal these shares across.

BTW, Humble Pie, I couldn't agree more with your assessment of the expertise in this forum. I assumed someone would have the answer so I took the lazy route and posted the question. I'll be on hold for 20m with TDDI but I'll report back with what they say.
 
#47 ·
So you are saying you own AQN-TSX with a synthetic DRIP - is that correct?

My experience with 2,000 AQN-TSX held in the CDN side of a TDDI account (from the account statement) was that it paid $0.1059 US/sh dividends for $211.80 US on the reported pay date which was converted to $285.40 CDN. This then bought an additional 26 shares on TSX at $10.64 CDN for $276.64 CDN.

I'm skeptical though because I make the exchange rate above to be 1.3475 (a dividend of $211.80 US became $285.40 CDN) on a day when BOC showed a daily high of 1.3164. I can't imagine TDDI giving up a spare penny, let alone using an exchange rate that would pay me $285.40 rather than $278.81.
The balance of dividend cash of $8.76 CDN ($285.40-$276.64) is not itemized anywhere on statements so it is impossible to actually confirm it remained in the account as cash because of numerous other transactions during the month.
 
#48 ·
OK. Spoke with TD.

On the Canadian side, I am paying 1 x FX + 15% US witholding tax. That will not change with a DRIP.

Six months ago, they were not able to open an American side of this account. I asked. That's why I'm holding the TSE issue. Now, they can create a US accout so they will do so. Once done, I can journal the AQN:TSE to the US side where it will remain TSE issued stock but the distributions will remain in USD without the witholding tax or FX. To sell, it would make sense to journal back the CDN side so I don't have to pay the FX.

As to why they can't journal this across and have it transform into AQN:NYSE, I'm not sure.
 
#49 ·
The TDDI trader I just spoke with tells me there is no FX with AQN on the CDN side.

Doesn't sound right.

OMO, I'm not sure what you're saying. It looks as though you didn't pay FX?

As for the FX, I believe the purchase happens 10 days after the dividend is paid? Perhaps the rate was calculated when the dividend was paid, instead of when the shares were purchased?

Also, thanks for the help. :)
 
#51 ·
The TDDI trader I just spoke with tells me there is no FX with AQN on the CDN side.

Doesn't sound right.


it doesn't seem to be right. I don't own AQN but it's an interlisted canadian stock with a US divvy. Those are the shares we normally keep in USD account, because the dividends arrive in a bulk payment via the CDS system in USD only.

broker systems, when they distribute the USD bulk payment in pro-rated amonts as dividend payments to the beneficial owners of the shares, automatically apply an FX fee to dividends going into CAD accounts.

it's true that some broker reps, particularly the new ones without much experience, have not yet bent their minds around some FX phenomena, so they say things like the above. A rep with more experience will usually be more accurate.


.
 
#58 ·
According to the AQN website, you have the option to receive your dividends in CDN.

Brookfield's website says that it will pay shareholders who have accounts in Canada in CDN, and those in the USA in USD, unless the recipient requests otherwise. Conversion will at BoC mid-day rates on the record date.

Dividends from my Brookfield shares last month (with CIBC) were shown on the statement as USD, but were converted to CDN at about the BoC rate on the distribution date (slightly better than the rate on the record date). I am keeping an eye on this to see if we get ripped off by CIBC. So far all is good.

I haven't received a div from AQN since CIBC changed over to having both US and CDN accounts in RRIF. I will be checking the Fx rate used when the dividend comes in later this month.
 
#59 ·
According to the AQN website, you have the option to receive your dividends in CDN.

might i caution you not to be misled by this kind of message, which many USD-dividend-paying companies still display on their websites.

99% of the time, messages about a dividend currency choice are for registered shareholders only.

registered shareholders are yesteryear. Today, nearly all retail shareholders are holding shares in street, ie in brokers' names at brokers. These shareholders - who are the majority now - have no option to select the currency of their dividend. They have to take what the broker gives them.

the entire story about brokers charging hidden FX on USD dividends paid by canadian companies is a very recent phenomenon. The IIROC has been encouraging all parties to be more transparent & fair to shareholders.

the brokers have responded to IIROC encouragement by pointing their fingers at USD dividend paying companies & saying It's Their Fault. These companies, say the brokers, are the guilty parties who decided to issue their dividends in USD, therefore the guilty must clean up their mess.

the IIROC has apparently bought this argument. Encouragement of companies to clean up their dividend conduct is underway. So far, a few companies such as brookfield & potash have tried to comply.

there is colossal disinformation everywhere on this topic. A couple of years ago i discovered that at least one transfer agent has gotten into the act, mistakenly informing companies such as brookfield that we retail investors at discount brokers are allowed to choose our dividend currency. However, this is not the case.

what makes the situation worse is that the dividend issuing companies who are doing their own dividend conversions, at their own expense, are not being consistent about which brokers they are doing this for.

brookfield itself is even more nightmarish since some brookfield companies - BAM itself for example - are trying to do the above, whereas other brookfield companies are not. At least, not yet.




Brookfield's website says that it will pay shareholders who have accounts in Canada in CDN, and those in the USA in USD, unless the recipient requests otherwise. Conversion will at BoC mid-day rates on the record date.

keep in mind that the "request otherwise" option is strictly for registered shareholders. Retail investors like us who hold street shares at brokers have no such choice. We have to take whatever dividend the brokers deliver.

.
 
#60 ·
Thanks Humble. Your comments prompted me to search a bit. I see that John Heinzl addressed this in a G&M article back in Dec 2014 that explains it well:

Unless you give your financial institution instructions otherwise, there’s a good chance you will continue to receive the dividend in Canadian dollars... My discount broker gets the dividend in U.S. dollars from Algonquin and then converts it to Canadian dollars on the payment date... There’s a downside to this, however: When converting currencies, brokers typically use an exchange rate that is favourable to them... This can add about 1.5 per cent or more in foreign exchange costs....

There is another way to receive Algonquin’s dividend in Canadian currency... “beneficial shareholders” – those whose shares are held by a financial institution – can contact their broker and request the Canadian-dollar equivalent of the dividend... the broker receives the dividend after the currency has already been converted to Canadian dollars by Algonquin’s transfer agent. The broker then passes the Canadian cash directly on to you, without making a profit... the conversion is based on the Bank of Canada noon exchange rate on the dividend record date – not on the dividend payment date...

Unfortunately, not all bank-owned brokers are making the Canadian currency option available, said Kelly Castledine, Algonquin’s director of investor relations. “We set it all up with CDS [Canadian Depository for Securities], so it’s doable. All the operations are in place to do it. It’s just that the banks don’t want to because they don’t get the FX [profit],” she said.


http://www.theglobeandmail.com/globe-investor/investor-education/can-i-still-get-my-algonquin-dividend-in-canadian-dollars/article22164168/

Now, when I use noon BOC 1.3427 on record date 30/12/2016, I get $284.38 CDN, much closer to the $285.40 I was paid.
It is still $1.02 less, which leads me to conclude that I really, really like this transfer agent. :)
 
#62 ·
actually this forum has been on the hidden-FX-fees-on-USD-dividends case since at least 2012.

this latest wrinkle in the history involves a tiny handful of companies who are trying to comply with IIROC encouragement that they should be more fair to retail investors whose shares are held in street. I've mentioned the known companies, AQN might be another.

i don't post too much about this wrinkle because it really is nightmarishly tricky. Keeping on top of which company is doing what & with which broker is like trying to work a thousand-piece jigsaw whose design has not yet been decided upon.

basically it means that:

a) investors should know which are the 26-30 or more canadian companies that pay USD dividends;
b) as a general rule shares in those companies should be kept in USD accounts;
c) however there are a few exceptions (brookfield, potash);
d) because of IIROC encouragement, there are likely to be more exceptions in the future;
e) no one knows which companies are the exceptions, or are going to be exceptions;
f) discount broker call centres know nothing about any of this;
g) sometimes the dividend-paying companies themselves don't know what's going on, therefore misinform investors.


all in all, just a regular day down on the farm. It was when i saw your name, onlyMO, that i thought i'd dare to venture forth on the topic once more, because i knew you'd understand. Jabberwock also.

.
 
#64 ·
Agreed with HP. This seems to come up many times in the forum:

When in doubt, hold CDN stocks that pay dividends in USD (26-30 or more canadian companies that pay USD dividends) in USD $$ accounts. Avoid the mess, time and energy spent in worrying about conversion charges and emailing investor relations departments.
 
#65 ·
no, the above is history as of 2-3 years ago. Reality has moved on & today the New Reality is different.

nowadays there are exceptions to the keep-canadian-companies-that-pay-USD-dividends-in-USD-accounts rule. There are going to be more & more exceptions. I've explained why in posts just upthread. The IIROC is involved in the mess now.

advisor, could you please do a favour here? i'm about to post a note to onlyMO, who is making a somewhat similar mistake. I'm trying to recruit both of you to the New Reality, which is that the payment of USD dividends differs nowadays from broker to broker & the current situation is a royal effyouseekayyoupee mess.

the topic is too big & too messy for one poor pie to handle alone. I'd love to see knowledgeable recruits, but they should be willing or able to get the story straight first of all. The way i see it, us old phartz have an obligation to report truthfully to cmf readers. I'll post more about what's currently happening in a moment.


.
 
#67 · (Edited)
are your interlisted dividends at risk for FX fees? here are more fax ma'am

.

just upthread i've posted about the New Reality with cross-currency dividends & about their Recent History, but here we go again.

keep in mind that brokers receive one bulk dividend payment from the CDS system, in one currency or the other currency. Brokers do *not* receive dividend bulks in 2 currencies & broker clients may *not* elect to receive in the currency of their choice.

what has been happening these past few years - oh, maybe 5 or 6 years, ever since investors kicked up a fuss over broker FX fees on canadian dividends in this forum - is a low-key, ongoing conversation among brokers, the issuing companies who are canadian interlisted stocks & the IIROC, which has been attempting to deal with investor complaints.


Brokers Blame the Companies

the brokers took the position that it was their right to charge FX fees on incoming dividends where applicable. Brokers pointed fingers at the dividend-issuing interlisted canadian companies & said the Problem was the Companies' Fault. The companies - said the brokers - were the parties who had decided to issue dividends in USD instead of traditional CAD in the first place. Therefore the companies - said the brokers - should be the ones to clean up their own mess.

keep in mind that the IIROC is actually the brokers acting in concert. Finance is a self-regulated industry. So in this case, the IIROC favoured its own members, who are the brokers.

now starts the New Reality. The IIROC keeps encouraging companies that pay USD dividends to Be Nice to Street Shareholders.


New Dividend Reality

gradually, in very recent years, some of the companies have indeed tried to do better for retail clients like ourselves, whose shares are held in street form at brokers. These companies thought that they should convert their USD dividends to CAD themselves, in their own treasury departments, at spot rates, at their own expense, before sending the bulk dividend amounts out to brokers.

the question was, how would these companies decide which broker customers wanted which currency?


Chaos Begins

at this point, severe misinformation entered the picture. The companies themselves claim that CDS system representatives and/or certain transfer agents have informed them that certain brokers wish to receive CAD dividends because (the misinformation says) these brokers have surveyed their clients & their clients prefer CAD.

the same CDS system representives and/or transfer agents are said to have informed the companies that certain other brokers have surveyed their clients & those other brokers desire USD divvies.

thus we investors end up with situations like brookfield (BAM.A) divvies are paid to TDDI in CAD but paid to other brokers such as BMO in USD. Similar story with Potash.

bref, all is chaos. Nobody knows what's happening.


As of Today

i find myself wondering how on earth so many people could be hallucinating that discount brokers lovingly & solicitously maintain expensive data bases indicating their clients' currency desires for each & every precious little dividend they are supposed to receive?

the fact is the brokers don't give an essaitcheyetee about the currency of their clients' dividends. The reality is that brokers grab each bulk dividend payment sent to them from a company's treasury department via the CDS system & process it immediately. Brokers ruthlessly apply FX fees to clients whose destination accounts are not in the same currency as the bulk dividend payment. Brokers promptly distribute a pro-rated post-applicable-fee dividend amount into each client's account. The entire operation takes only a few hours.

only a few years ago, scribes like myself who worked to expose the above procedure, could safely suggest that investors who wished to avoid FX fees on dividends should keep those shares in the currency account of the dividend itself.

but no longer. Nowadays that rule is bye-bye. Gradually, as the IIROC exhorts its members to Act Nice to Shareholders, more & more companies will be deciding to do what brookfield & potash have done, which is convert their dividends themselves at head office.

a huge problem arises today because A) brokers don't know what is going on & B) investors themselves don't know what is going on either.

do the companies announce changes to their dividend policy via public news releases? no they do not.

do their websites state the new facts? no they do not.

are broker call centres trained to handle this level of tricky, detailed information? no they are not.

how can investors find out what is happening with their dividends at any of the 25-30 canadian companies that pay USD dividends? chaotic as it may sound, a good place for decent information is a forum like this one. Pick your sources carefully, though.


.
 
#70 ·
I own AQN in Cdn$, and have been attempting to estimate the cost of the FX exchange. Figuring out when they exchange is one of the hardest parts; I've calculated -2% to +2% based on when I thought the exchange would occur, but currencies can easily fluctuate by 0.5% even within a day. In the end, its 2% of a 5% dividend yield, and potentially I'm out $20 of FX fees for close to $3,000+ of returns in 1 year, so I'll continue monitoring. I'm sure this adds up for the broker across all accounts but I doubt it's enough to make or break their business. I feel its important to be sure you're not being ripped off, but also feel a little bit that once you're comfortable with the cost, don't jump too far in and as they say let the tax tail wag the investment dog. Better to focus on whether AQN is a good investment, and if you lose 2% of your total dividend, it's probably going to be a rounding area in your total return. Thanks for the additional analsis here though :)
 
#73 ·
doctrine you're quite right when you say that broker FX fees on individual dividends for a single retail investor won't matter much. Particularly when a holding will only be held for a short period of time.

but many investors hold stocks across many years, even decades. Broker FX fees on dividends from such holdings are well worth stopping.

my reason for posting on this topic is that i'm approaching as a journalist, not as an investor. The area of hidden broker FX fees has become my special niche.

when i first came to cmf forum in 2009, i thought everybody knew how to avoid FX by arbitraging currencies, aka gambit trading, between toronto & new york markets. I was taught this by senior traders at a brokerage house in the late 1990s. But in 2009, in this forum, i was astonished to observe that no one knew how to do this.

i also thought that everybody knew to keep their USD dividend canadian stocks in USD accounts, in order to avoid broker FX fees on the dividends. But it turned out that nobody on here knew about this strategy either, so i began posting in this forum.

some cmffers like to rant against banks in the abstract. What i prefer to do is try to show how some of the banks' more egregious FX practices can be avoided.

as for how profitable FX fees are for brokers, senior representatives over the years have always told me that FX fees, like margin borrowing, are lucrative revenue lines for brokers. The work brokers have to do to collect FX fees is minimal, since they are acting as agents for their banks.

more than 30 canadian companies now pay USD dividends. The names of most of these are household words such as potash, encana, fairfax. Their shares are widely held by millions of canadian investors across all brokerages. When one takes into account the total dividend stream from all such companies to clients at all brokers, the effortless 1% FX fees charged by brokers on these dividends loom large.


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#78 ·
What HP has been trying to say is that forex fees on dividend payments from Cdn interlisted stocks that pay dividends in USD can mostly be avoided if one 'works' the system. Sometimes it is just a matter of putting that interlisted stock in the USD side of one's account. Other times, it takes effort with company Investor Relations and/or the brokerage. Maybe one cannot be lucky at all. Start by checking IF your dividends from POT, AQN, etc are being shortchanged by forex fees. Then ask the brokerage how to avoid that (may be as simple as putting the stock on the USD side of the account).

As an example, when I first bought my AQN stock, I journalled it over to the USD side of my account right after purchase and waited for the first dividend to arrive. I checked it to make sure I was not losing anything and I wasn't, so that was/is the end of the story for now. Had I found out I was losing 2 ways, e.g. first being converted to CAD and then back to USD for my USD side of my account, I would have attempted via the brokerage or investor relations to see if my dividend could stay in USD. IF not, then I would have moved AQN back to the CAD side of the account to only get dinged once on forex. Seems every interlisted stock paying out USD dividends has to be looked at individually, and I suspect (but don't know) if that process varies by brokerage.
 
#79 ·
What HP has been trying to say is that forex fees on dividend payments from Cdn interlisted stocks that pay dividends in USD can mostly be avoided if one 'works' the system. Sometimes it is just a matter of putting that interlisted stock in the USD side of one's account. Other times, it takes effort with company Investor Relations and/or the brokerage. Maybe one cannot be lucky at all. Start by checking IF your dividends from POT, AQN, etc are being shortchanged by forex fees. Then ask the brokerage how to avoid that (may be as simple as putting the stock on the USD side of the account).
... first, your explanation is ALOT clearer, thanks. Yes, I could consider interlisting the stock(s) onto the US side now with CIBC Investoredge but given the high exchange rate, that doesn't seem to be ideal.

[/QUOTE] As an example, when I first bought my AQN stock, I journalled it over to the USD side of my account right after purchase and waited for the first dividend to arrive. I checked it to make sure I was not losing anything and I wasn't, so that was/is the end of the story for now. Had I found out I was losing 2 ways, e.g. first being converted to CAD and then back to USD for my USD side of my account, I would have attempted via the brokerage or investor relations to see if my dividend could stay in USD. IF not, then I would have moved AQN back to the CAD side of the account to only get dinged once on forex. Seems every interlisted stock paying out USD dividends has to be looked at individually, and I suspect (but don't know) if that process varies by brokerage.[/QUOTE] ... seems like this is the case with AQN with me - bought it with C$ to hold and DRIP ... until AQN decided to pay in US$ which means I do get dinged. But given my dividends only fetch a few bucks $10?, I'm not sure if it is worth my while (time and effort) to figure / calculate out the whole rigoramole, particularly it is in a TFSA also - is there withholding tax too? I would rather focus on getting the right investment/stock and what other big bucks fees (MERs, etc.). Perhaps if my dividends were in the hundreds, then it's a different story.
 
#80 ·
As an example, when I first bought my AQN stock, I journalled it over to the USD side of my account right after purchase and waited for the first dividend to arrive. I checked it to make sure I was not losing anything and I wasn't, so that was/is the end of the story for now. Had I found out I was losing 2 ways, e.g. first being converted to CAD and then back to USD for my USD side of my account, I would have attempted via the brokerage or investor relations to see if my dividend could stay in USD. IF not, then I would have moved AQN back to the CAD side of the account to only get dinged once on forex. Seems every interlisted stock paying out USD dividends has to be looked at individually, and I suspect (but don't know) if that process varies by brokerage.
... seems like this is the case with AQN with me - bought it with C$ to hold and DRIP ... until AQN decided to pay in US$ which means I do get dinged. But given my dividends only fetch a few bucks $10?, I'm not sure if it is worth my while (time and effort) to figure / calculate out the whole rigoramole, particularly it is in a TFSA also - is there withholding tax too? I would rather focus on getting the right investment/stock and what other big bucks fees (MERs, etc.). Perhaps if my dividends were in the hundreds, then it's a different story.
 
#82 ·
There should be no withholding tax on ANY Canadian stock, whether the dividend is paid in USD or CAD. It is not the currency that matters... it is where the stock is domiciled and AQN is Canadian.
 
#84 ·
Yes, I oversimplify partly out of intent to get the key message across, and partly because I tire of banging on the keyboard too much...probably because I post too much.... :stupid:
 
#85 ·
More important for all of us (or me, at least), AQN set a new closing high today. Although it has outperformed the index by a huge margin over any period longer than a year or so, it has been lagging especially in the last 6 months but has more recently been outperforming for the last month. A good investment regardless of the currency of the dividend payment.
 
#87 ·
the globe's john heinzl corrected himself between his 2014 article quoted upthread - where he got a few things wrong - & this article in 2016, where he got things right.

here's heinzl's 2016 number. It's mostly accurate. I won't repeat what his earlier mistakes were. They're still causing confusion in the sector so it's best they should fade into oblivion.

http://www.theglobeandmail.com/glob...ian-stock-pays-a-us-dividend/article29499346/

.
 
#88 ·
...duh.... so, if I wanted to buy a few shares of AQN, is it better (simpler? less confusing? less frustrating?) for me to buy them on the NYSE , in US $, on US side of my (non-reg.) trading account? or on the TSX , in loonies, on the Cdn. side of my account?
Or, should i just STAY AWAY from AQN?
 
#89 ·
There is no difference buying in USD on the NYSE or in CAD on the TSX. It is the same stock with arbitrage taking out the bulk of currency differences. Which currency do you have available to spend?
 
#91 ·
I have AQN on the USD side of my portfolio because AQN pays dividend in USD. But I purchased a partial position on the TSX because I had CAD available... I simply journalled it over to the USD side after settlement. IOW, it really makes no difference but you can save a step by purchasing it on NYSE in USD and leaving it on the USD side of your portfolio. Just be sure to make the purchase from the USD side of the portfolio in that case.

I would now like to fill out that position (when the price is right) and if that was to happen soon, I have USD available now for that.....so I would then purchase it on NYSE from the USD side of the portfolio.
 
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