In Canada, one does not pay dividend withholding tax on US shares held within a RSP. If they are held in a TFSA or a Non-Registered Account, you are subject to a 15% dividend withholding tax.
I found out about a year ago that there is no dividend withholding tax on UK shares no matter what account they are held in; be it an RSP, TFSA or Non-Registered.
To purchase more US stocks, and avoid paying a dividend withholding tax, I had to make room in my RSP Account. So yesterday, I sold my 200 shares of Tesco, a UK based company. If the share price decreases to $16.50, I plan on repurchasing these shares in my TFSA.
Initial Purchase February 14th, 2012 for $2,979.95 ($14.90/share)
Sold February 6th, 2013 for $3,380.96 ($16.95/share)
Dividends received $131.76
Total return = (3380.96 + 131.76 – 2979.95) / 2979.95 = 17.9%
With this sale, my 12-month forward dividends stand at $3,618.58.
I like Tesco, and so does Warren. With my luck, the share price will rocket from here on. That's what happend to Dell a few days after I sold it. On the other hand, with the sale of Tesco, consumer staples now represent 32.4% of my portfolio - so a little diversification might do my portfolio some good.