What are the tax implications for investors receiving this dividend, especially for non-resident shareholders?
Tax considerations for the $0.11 CAD monthly dividend
Resident Canadian investors – The dividend is classified as a eligible Canadian dividend (it is paid out of earnings that have been taxed at the corporate level). For a Canadian‑resident shareholder the amount is grossed‑up by 38 % and a 15 % federal dividend‑tax‑credit (plus the applicable provincial credit) is applied. In practice the net tax on the $0.11 CAD per share is roughly 5‑7 % of the pre‑tax amount, depending on the province of residence. The dividend is fully taxable in the year it is received and must be reported on the T‑slip (T5) that the broker will issue.
Non‑resident shareholders – Canada imposes a 30 % withholding tax on dividends paid to non‑resident individuals (or 15 % if the shareholder is a resident of a country that has a tax treaty that reduces the rate). The United‑States‑Canada treaty, for example, cuts the rate to 15 % provided the shareholder submits a valid Form W‑8BEN to the paying agent. The withholding is a final tax; the non‑resident cannot claim a Canadian credit, but the dividend may be creditable against tax payable in the home jurisdiction under the treaty’s foreign‑tax‑credit provisions. If the investor’s home country taxes dividends at a lower effective rate, a refund may be possible through that country’s tax return.
Trading implications
Because the dividend is modest (≈ $0.11 CAD) and paid monthly, the cash‑flow impact on the share price is limited. Technicals show PEY trading in a tight range around the $2.00 CAD level, with the monthly dividend historically causing a small, short‑lived dip (≈ 1‑2 %) on the ex‑date followed by a quick rebound. For non‑resident investors, the higher withholding tax erodes the yield (net ≈ 0.04 CAD per share) versus the ≈ 0.09 CAD net for Canadians, so the effective dividend yield is more attractive for residents.
Actionable insight – If you are a non‑resident, confirm your treaty status and submit the appropriate W‑8BEN to ensure the reduced 15 % rate; otherwise, the 30 % withholding will significantly lower the already modest yield. Canadian residents can treat the dividend as a small, steady cash‑flow component and may look for buying opportunities on the typical 1‑2 % post‑ex‑date dip, especially if the stock’s technical momentum remains bullish.