A couple of weeks ago, I wrote that “as the U.S. dollar has weakened against the Canadian dollar, it could be an opportune time for Canadians to buy U.S. stocks and for Americans to stick with U.S. stocks instead of buying Canadian stocks.”
Since then, as shown in the chart below, the USD has recovered slightly.
Notably, the USD is still a way off from its five-year midpoint of approximately C$1.30. Moreover, the WTI oil price is at a high point of +US$71 per barrel, which could weaken from there. Therefore, Canadian and U.S. investors alike are probably better off continuing to invest new money in U.S. stocks trading at good valuations.
Much like two weeks ago, I still find value in Bristol-Myers Squibb (NYSE:BMY). Merck (NYSE:MRK) that’s in the same space is also similarly undervalued. The dividend stocks offer decent yields of about 3%.
Making money from the stock market requires buying and selling stocks. The idea is to profit from capital gains when you sell stocks for higher prices than you paid them for.
When you build a dividend stock portfolio, you can potentially reduce tremendous amounts of work by focusing only on the buying. If you want to create a durable dividend stock portfolio with less work, here are three tips for you!
Dividend stock selection
You want to select dividend stocks with durably growing dividends for your buy-and-hold dividend portfolio. Here are some examples.
Contemplating what dividend stocks to invest in June 2021? As the U.S. dollar has weakened against the Canadian dollar, it could be an opportune time for Canadians to buy U.S. stocks and for Americans to stick with U.S. stocks instead of buying Canadian stocks.
As usual, investors should stick with investing in well-valued stocks for long-term outperformance. Having a long-term view puts the odds in retail investors’ favour versus fund managers who are pressured to deliver market outperformance on an annual or even quarterly basis.
Canadians could also invest in quality Canadian stocks that are well valued if they already bought all the U.S. stocks they want currently. Just know that when the U.S. dollar strengthens against the Canadian dollar, Canadian investors would benefit from foreign exchange normalization as well as price appreciation from U.S. stocks bought at good valuations. If Canadians buy quality U.S. dividend stocks now, the dividend income will also increase on favourable foreign exchange normalization.