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2 Canadian Dividend Aristocrats Are the Top Picks of U.S. Investors

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More than 200 publicly listed Canadian companies are cross-listed in U.S. stock exchanges. As such, their shares trade simultaneously in the TSX and NYSE or NASDAQ. Listing across the border makes perfect sense, because a company can broaden its investor base to include American investors — retail or institutional.

Cross-listing also helps in image building, especially if the company has novelty products or services. Canadians can also invest in U.S. stocks and hold them in a Registered Retirement Savings Plan (RRSP) for tax-free dividends.

A published article by Kiplinger in March 2021 lists down the 20 Best Canadian Dividend Stocks for U.S. investors. Four of the Big Five Canadian banks, three pipeline giants, the country’s two largest telco firms, and one established utility company are among the recommended stocks.

The surprising names on the list are Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) and Franco-Nevada (TSX:FNV)(NYSE:FNV). While their inclusion appears odd, both companies deserve their 10th and 12th spots — higher than Telus and top energy stock Enbridge. Pembina Pipeline is in the top spot.

Winning streak

Brookfield Infrastructure is fresh from its conquest of Inter Pipeline. The $21.13 billion global infrastructure company beat Pembina in a heated bidding war. Also, its wealthy mother company, Brookfield Asset Management, is fourth on Kiplinger’s list.

Whether Canadian or American, this stock is one of the best to buy and hold today. The current share price is $71.50, while the dividend yield is 3.58%. Kiplinger highlights Brookfield’s 12 consecutive annual distribution increases. In the first half of 2021 (six months ended June 30, 2021), net income grew 834.5% to US$542 million versus the same period in 2020.

Apart from the strong results from the base business in Q2 2021, Brookfield had more liquidity. Its CEO, Sam Pollock, said, “The recent completion of several large capital recycling initiatives has provided enhanced liquidity to support our robust pipeline of new investments.”

Pollock added, “We are well-positioned to sustain our momentum into the second half of the year as market conditions are favourable for our business.” The latest addition to Brookfield’s growing portfolio is the joint venture with Digital Realty to develop and operate data centres in India. Ride the company’s winning streak for income and growth.

Unique business model

Franco-Nevada caught the attention of Kiplinger because the business model is unique. Investors gain exposure to the most precious metal in the world: gold. Moreover, the $36.73 billion gold-focused royalty and streaming company has the largest and most diversified cash flow-producing assets portfolio.

While the mining stock pays only a modest 0.78% dividend ($192.93 per share), Kiplinger noted the 13 consecutive annual dividend increases. Franco-Nevada has no mines, but it funds mine developments for interested parties in exchange for a cut in future revenue.

As of June 30, 2021, Franco-Nevada is debt-free with a solid financial position ($1.4 billion in available capital). In Q2 2021, the company posted record results. Its revenue and net income climbed 78% and 86% versus Q2 2020. Management expects improved business performance in the second half of 2021 and sees a 25% revenue growth in the next five years.

International recognition

Many Canadian firms cross-list in the U.S. to gain international exposure and recognition. Brookfield Infrastructure and Franco-Nevada made a move and are now among the top choices of U.S investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management and Enbridge. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV, Brookfield Infra Partners LP Units, Brookfield Infrastructure Partners, PEMBINA PIPELINE CORPORATION, and TELUS CORPORATION.

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