Choice of Stock Exchange

[The Monegasque]

Hello Jerome,
Thank you very much for this site, excellent!
I have been reading you for several months, a real pleasure.
My question concerns a technical point.
After researching some of the stocks on the "Dividend Aristocrats" list, I discovered that they could be listed
on several markets, of course in their respective currencies:
example: on Nyse Euronext in Euro, and NYSE in dollars
Therefore, I would like to know why it is more interesting to buy them on the NYSE, in dollars, when I can buy them
in euros (no exchange for me, resident of the European Union)? In addition, there is the exchange risk management to master.
Are dividends different on the NYSE than on Euronext?
Is the value of a stock's dividends the same across markets, just adjusted for the exchange rate?
Can you enlighten me, and come back to the notion of fixing dividends in Assembly, in Europe, or in the States?

THANKS.

[Jerome]

Hello Monegasque

Thanks for your compliments. Personally I prefer to buy the original! I think that the stocks you are talking about do not offer quarterly dividend payments, unlike stocks listed on the NYSE. Check.

And then it's not because you buy the replica on Euronext that you don't bear the exchange rate risk, because it will be included in the price. The only small advantage is that you can buy/sell directly in your base currency, but is it really worth it, especially when you buy for the long term? Some people get around the problem by having a cash account denominated in dollars.

[birdienumnum]

Hello,

I find the question very relevant.

A few years ago, I invested in British and French companies on the NYSE, therefore in USD. My only real motivation to buy ADRs rather than directly, at the time, was the strength of the EUR/CHF vs. USD/CHF (my reference currency being the CHF). Today this motivation is no longer relevant with the fall of the EUR or the GBP against the CHF.

Note that in terms of taxation, the withholding tax on the dividend for an ADR is the same as for the title on its domestic market. For example, the withholding tax is 30% on the Sanofi (SAN) title that I hold in the US.

In terms of dividend yield, in theory, there should be no difference between the two because any difference would create an arbitrage opportunity and the prices would readjust...well that's the theory...because the dividends are the same in local currency but the dividend payments made to ADR holders are not "hedged" and if the currency fluctuates greatly between the decision of the board of directors and the detachment of the dividend for the ADR, there may be differences.

There are also some risks in holding ADRs. For example, a company may get tired of the US reporting constraints and the overall cost of being listed in the US. In such a case, the company may want to delist from the US stock exchange. This happens from time to time (and there are also fashion effects) and I don't know what happens to the holder: do they offer him cash or shares of the reference country?

Well, all that is blah blah... basically, it is better to buy securities on their reference market rather than on a secondary market such as ADR in the US, especially if the reference market is in the same currency as the investor's reference currency.

A+

[The Monegasque]

Thank you for your answers and advice.
(“ADR? what does it mean?”)
What will happen to the taxation of US dividends following the news?
provisions in France?
THANKS,

[Jerome]

American Depositary Receipt:

A negotiable certificate issued by a US bank representing a specified number of shares (or one share) in a foreign stock that is traded on a US exchange. ADRs are denominated in US dollars, with the underlying security held by a US financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction.

Read more: http://www.investopedia.com/terms/a/adr.asp#ixzz28AmJ8cWK

Regarding your question on the new French taxation, I think that Lopazz will be best able to answer you.
see his post
http://www.dividendes.ch/forum/?vasthtmlaction=viewtopic&t=17.0

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