There are 177 securities listed on both the TSX and U.S. exchanges. A cross-listed company doesn’t always equal a good company, but it can be a great way to offset home country bias while avoiding currency exchange fees and U.S. withholding taxes.
Aside from cross-listings for the Big Five Canadian banks and the Brookfield Five, consider these three dividend-paying companies for direct U.S. exposure in your TFSA.
Canadian National Railway (TSX:CNR)(NYSE:CNI)
CNR is a TSX favourite and one of the hand-picked stocks that make up the Bill & Melinda Gates Foundation Trust. As the largest single shareholder of CNR, Gates has a history of investing in companies with strong competitive advantages.
CNR is often praised as the only North American rail network capable of serving three coasts. But what exactly does that mean? CNR has a rail network connecting the east and west coasts of Canada and runs through the heart of America, terminating at the Gulf of Mexico. In order to strengthen a position at these coasts, CNR has signed six supply chain agreements, including one with the Port of New Orleans.
While oil pipelines come and go and are frequently used as political tools, the CNR rail network is perfectly positioned to continue moving crude oil to the Port of New Orleans, which acts as a major logistics hub for the distribution of crude oil.
Nutrien (TSX:NTR)(NYSE:NTR)
Nutrien has been an interesting company to watch after coming to life from the merger of Potash Corporation of Saskatchewan and Agrium in 2018. There is no doubt that competitors for Nutrien include potash, phosphate, and nitrogen producers, but that is only one side of the business. The other side of the business comes from Agrium, which brings a huge network of retail stores located in seven countries and provides products and services for farmers and growers.
I believe the retail side of the business is more attractive and is the reason I was an Agrium shareholder before the merger. With 1077 retail stores in the United States, Nutrien gives investors direct U.S. market exposure to the agriculture industry which has proven to be recession resistant. Everyone needs to eat.
Waste Connections (TSX:WCN)(NYSE:WCN)
Waste Connections has a tremendous track record of growth and is the third-largest waste management company in North America. Investors receive immediate access to the U.S. market since the majority of revenue is derived from operations in the U.S. with Canada accounting for only 16% of revenue.
Waste Connections entered the Canadian market with the 2016 acquisition of Progressive Waste Services of Canada. The Canadian branch is now branded as Waste Connections of Canada.
Uncertainty surrounding the oil industry is one area of concern for Waste Connections, but it is a small concern, since revenue from waste handling for the oil industry makes up only 5% of total revenue.
Investor takeaway
Buying cross-listed companies on the TSX is a great strategy for any Canadian investor, but it can be even more beneficial for your TFSA since it provides U.S. market exposure without the hassle of withholding taxes on American dividend-paying stocks. Save the American dividend-paying stocks for your RRSP and enjoy all the benefits that come with investing in America.
