With the Canadian dollar more or less at par with the U.S. dollar and our neighbour to the south in slow recovery mode, I have become interested in adding some U.S. dividend stocks to my portfolio.

I have been happy with my Canadian stocks but let’s face it, if it’s good dividends we’re after, we are pretty well limited to financial, telecom, utility and resource stocks.  We have to go beyond our borders to get more diversification.  Many U.S. companies have few or no Canadian counterparts especially in consumer products, manufacturing and health services, and the multinational companies have global appeal.

Even with the 15% withholding tax on dividends (except in an RRSP), some of the blue chip corporations have a high enough dividend yield to make it worthwhile, especially if the dividends continue to increase.  For example, McDonald’s recently increased their dividend from $2.25 to $2.44, increasing the yield from 3% to 3.3%.

Some other companies that are predicted to increase dividends this year are:

Company Price Dividend Yield
Johnson & Johnson $62.56 $2.16 3.5%
Coca Cola $63.13 $1.76 2.8%
Proctor & Gamble $65.53 $1.93 2.9%

Another good bet for a U.S. dividend stock is Merck.  At $34.23 the price is a bit more within my range.  And with a dividend of $1.52 giving a yield of 4.4% it may be worth thinking about.

Some prices are still too high though for my budget.  I would have to purchase small amounts over a period of time to have a worthwhile portfolio and I haven’t yet decided if that’s the right track for me – although I have always wanted to own a piece of Wal-Mart.

You can download a list of the S&P High Yield Dividend Aristocrats at www.standardandpoors.com/indices.

Are there any U.S. dividend stocks on your watch list?

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