5 Cheap US Stock Brokers who accept UK-resident Account Holders

America is big. Really big. And what it offers to dividend hunters is equally huge: innumerable dividend aristocrats.

Ever since I started investing, there have been a number of stocks which have caught my eye across the pond.

However, I was reticent to dive into foreign stock ownership. It was all just a little more complicated and expensive.

As I have discussed previously, foreign exchange charges at my broker are not only delivered at the point of purchase but also levied on the dividend income as well.

At 1.5% this is not a small amount. Not being able to hold foreign currency in my brokerage account means that this could become--potentially--an expensive enterprise over the number of years I plan to invest for.

Eventually, I will likely yield and look to add some North American stock to my portfolio. However, whether or not it will be directly through individual shares on a US exchange or through a London-listed Investment Trust or ETF I do not yet know.

However, with the possibility of buying and holding US shares directly and over the long term I have started to investigate the best method by which to do this.

How does your Broker's Foreign Exchange Charge affect your Yield?

NB: I have included a little present at the end of this post. Don't get too excited! It is just a little downloadable spreadsheet at the so you can work out the effect on your investments yourself.

I have been contemplating investing in some foreign (chiefly US) equities for some time now.

I have not yet as I think they are far too expensive currently. In the long run I expect to slowly but surely pull in a couple of US companies (such as Procter & Gamble, Johnson & Johnson, and maybe General Electric) into my portfolio.

However, of course, this incurs further costs in UK brokerage accounts. The prevailing foreign exchange rate, of course, impacts on this significantly. Whether or not the dollar or pound is stronger can--in some cases--seriously affect your return.

However, that is not something that purely affects foreign listed companies. Several of my London-listed companies also report in US dollar (the commodity giants BP, BHP Billiton and Royal Dutch Shell come to mind).

It is also not the focus of this post! The actual subject is an additional cost connected with foreign equities: the foreign exchange conversion charge.

In other words, an additional charge for undertaking the conversion of currencies. This is usually levied on dividend conversion as well as purchases/sales.