What tax implications does the 'eligible dividend' status have for Canadian and US investors?

Tax implications of the “eligible dividend” label

For Canadian investors the dividend is treated as an eligible dividend under subsection 89(1) of the Income Tax Act. This means the amount is gross‑up (+38 % for 2025) and a non‑refundable dividend tax credit is applied, reducing the effective tax rate to roughly 25‑30 % for most individuals (lower than the 38 % rate on non‑eligible dividends). Consequently, the after‑tax yield for a Canadian holder of EPSN is higher than the headline 2.5 % annualized payout. U.S. investors, on the other hand, receive a 15 % withholding tax under the Canada‑U.S. tax treaty (reduced to 10 % for portfolio‑interest dividends, but EPSN’s dividend qualifies as a regular dividend). Because the payment is a regular dividend from a Canadian corporation, it is generally eligible to be treated as a qualified dividend in the U.S., allowing it to be taxed at the lower long‑term capital‑gain rates (0 %, 15 % or 20 % depending on the investor’s tax bracket) after the foreign‑tax credit is claimed. The net effect is a modest after‑tax yield of roughly 1.5‑2 % for U.S. holders.

Trading outlook and actionable take‑aways

Fundamentally, EPSN’s $0.0625 per‑share quarterly payout (annualized $0.25) is modest but signals cash flow stability in a volatile energy sector, offering a modest dividend yield (~2 % based on the current ~US$12 price). Technically, the stock has been trading in a tight range between $11.60 and $12.40 for the past six weeks, with the 20‑day SMA holding near $12.10 and RSI hovering around 45, suggesting limited upside pressure but also low oversold risk. The dividend record date (Sept 15) often triggers a short‑term “dividend capture” buying pressure; combined with the tax advantage for Canadians, the dividend may act as a floor support level.

Action – Consider entering a modest long position or a dividend‑capture trade if EPSN can hold above the $12.00 support level, especially for Canadian investors seeking the enhanced after‑tax yield. Place a stop‑loss just below $11.60 to protect against a sector‑wide energy sell‑off, and monitor U.S. tax‑credit filing deadlines to ensure the foreign‑tax credit is captured, preserving the net yield for U.S. holders.