Canadian bank sectors expected to boost payouts in 2016

Dividend stocks are investors favourite during the economic uncertainty. Dividends signal a strong performance by the company and it also allows investors to make some return on investment during the tough time.

However, with the S&P 500 only recorded a yield of 2.1 percent it is uncertain of how the market will react in 2016.

According to Forbes contributor Brett Owens, investors' attention should be on the Toronto Stock Exchange as the market have been doing relatively well there. The country's bank sector share is trading at discount rate due to low oil price.

Based on the track record, most of the companies in the banking sector will give dividend payment twice a year with a yield of more than 4 percent.

The first company that should be in the watch list is the Royal Bank of Canada. The company pays 4.4 percent in dividend this year and have been managed to grow the amount of dividend by 10.9 percent annually. With Canadian Dollar getting stronger against US Dollar, Royal Bank of Canada is expected to give more than double in dividend for 2016.

Another stock that is expected to boost payment in 2016 is Toronto Dominion. The company pays 4.1 percent in dividend for this year and it also gives out two raise a year since 2011. The company recorded a consistent earnings of 6 percent annually and it is currently trading at 12-times its earning and 1.6-times book value. It is currently traded at discounted price.

The third stocks to watch out for is The Bank of Montreal. The bank had been paying dividends yearly in Canada without any fail. It is currently trading at 25 percent discounted price when compared to its five-year average.

As for this year, The Bank of Montreal gave 5 percent yield to its investor and is expected to give more next year.

Goldman Sachs also agreed with the dividend yield strategy as it had released 50 stocks picks that is expected to increase its dividend by next year. The Street released ten shares out of fifty but focused mainly on the US market.

Currently, median S&P 500 stocks gives a dividend yield of 2.2 percent with an expected growth of 7 percent by 2016.

The Kiplinger also made an evaluation that oil stocks will still give out big dividend next year based on the assumption that it will try to keep his investors around during the tough time. The website made their analysis based on previous track record and list down major companies such as Exxon Mobil and Chevron great to invest for the dividend.

However, Brett Owens deter from oil-related stocks as the uncertainty in global price as the latest Commitment of Traders report noted that oil companies still have a net long of 130,000 contracts.