Diversification Benefits for Canadian Investors

Canadian investors may find value in diversifying their portfolios with U.S. dividend-paying companies. These stocks offer attractive yields, growth potential, and reasonable valuations, especially considering the concentrated nature of the Canadian market.

Home Country Bias and Market Concentration

Canadian investors often demonstrate a preference for domestic investments, known as home country bias. While understandable, this can limit diversification, particularly given the Canadian stock market’s concentration in financials, energy, and materials.

The U.S. market, in contrast, provides a broader range of investment opportunities and a more diversified sector landscape. As of January 30, 2026, the United States represents approximately 63% of the MSCI All Country World Index, while Canada constitutes only around 3%.

Screening Methodology

A screening process using FactSet identified compelling U.S. dividend-paying companies based on attractive yields, positive growth prospects, and reasonable valuations. The criteria included expectations of positive sales and earnings growth over the next year.

Key Metrics Used

  • Dividend Yield
  • Dividend Payout Ratio
  • Forward Price-to-Earnings (P/E) Ratio
  • Price-to-Free-Cash-Flow (P/FCF) Ratio
  • Enterprise Value-to-EBITDA

    • Verizon: A Strong Dividend Option

    While AT&T Inc. initially topped the screen, Verizon emerged as a more favorable option due to its higher dividend yield and stronger year-to-date total return. Verizon currently offers a 5.9% dividend yield with a forward P/E ratio of 9.6 times, below the group average of 13 times.

    The company reported a record adjusted EBITDA of US$13.4 billion, a 6.7% year-over-year increase, and its first positive first-quarter net additions of postpaid phone subscribers since 2013. Management raised its full-year adjusted earnings-per-share guidance to 5-6% growth and reaffirmed free cash flow guidance of at least US$21.5 billion.

    Verizon’s commitment to returning value to shareholders is demonstrated by its consistent dividend increases, with the 19th consecutive raise occurring in September 2025.

    Accenture: Technology Sector Potential

    Accenture, a global consulting and technology services firm, ranked third with a 3.6% dividend yield and is the only technology sector company to meet the screening criteria. Despite a year-to-date share price decline of 31.9%, the company’s fundamentals are strong.

    First-quarter results showed a substantial 76% increase in advanced AI bookings, reaching US$2.2 billion, and a 120% surge in advanced AI revenue to US$1.1 billion. Accenture also reported record bookings of US$22.1 billion and increased its quarterly dividend by 10% to US$1.63 per share for fiscal 2026.

    Disclaimer

    This information is not financial advice and should not be taken as such. The author disclaims any liability for actions taken based on this information.