WSP Global is a Canadian engineering consultation firm that also happens to be one of the first companies whose stocks I bought for my portfolio. In fact I bought my WSP shares before I even created this website. If I remember correctly, I decided to buy into the company after reading about them in the Globe and Mail (arguably Canada’s most important national news paper). It had everything I was looking for at the time: a ‘strong buy’ rating, a lot of potential for growth, and a healthy (yet not too crazy) dividend yield. What I didn’t know at the time, however, was to check the company’s dividend history to see if there was a regular pattern of dividend growth. You can imagine my post-buy shock, however, when I discovered that the company actually fails pretty spectacularly on this front. In fact, WSP Global hasn’t raised its dividend even once (as far as I can tell) since at least 2011. Once I had figured this out, it became obvious to me that I had made a mistake. Ever since then I’ve been wondering about what I should do with these shares. Today I decided to sell them.

Reason for the Sale

As a longterm dividend growth investor, one of the most important things you want to look for is a regular history of dividend growth. Not only do you want to buy into companies that increase their dividends on a regular basis, but you want to find companies that do so without jeopardizing their ability to pay dividends in the future. For example, the last thing you want is a company that pays for its increasing dividends by taking out loans (extreme case). While the latter point doesn’t apply to WSP Global, the fact that the company has never raised its dividends even once (at least since 2011), should have automatically disqualified it from being in my dividend growth portfolio. Live and learn right?

On the upside, besides making a decent 7-8% gain, my WSP Global stocks also happen to be in my RRSP account (Registered Retirement Saving Plan for you non-Canadians), which means that I’ll now have some room to buy US stocks. The reason why I’m saying this is because in Canada there are two main types of tax-sheltered trading accounts: RRSPs and TFSAs (Tax Free Savings Accounts). Without going too far into what makes these types of accounts unique, one of the important differences between the two is how foreign taxes are handled. Put simply, dividends from US companies paid into an RRSP account don’t have any US foreign tax withheld — regretfully, the same cannot be said about TFSAs. Consequently, every Canadian investor should strive to have all of their US stocks held in RRSP accounts to avoid paying US taxes. This too was a lesson I learned the hard way. Given that my RRSP accounts are maxed out, I’ve been reluctant to buy any more US stocks. With this sale, I will now be able to do so.

What will I Buy with the Proceeds?

For the reasons I mentioned before, I want to see if I can find any US stocks that would be worth adding to my portfolio. There are a lot of options out there to choose from — way more than in the Canadian markets — so I have my work cut out for me. However, my problem is made even more difficult given the fact that the stock market is currently sitting at an all time high. Consequently, as others in the investing blogosphere have mentioned, there aren’t a lot of good deals out there. I also have to take into consideration Canada’s weak dollar, which puts US stocks at a premium for us Canadian investors. If our dollar goes back up, I could potentially lose quite a bit of money. As a result, it might not even be a good idea to buy US stocks right now. I’m definitely going to take some time to think about this.

That’s it for now… thanks for reading,

André