It's quite hard to know which direction the share market is going to move during any given month or year. This can make it quite hard to know if today is a good day to buy a stock, particularly 'growth' stocks.
If you buy a growth stock at the wrong price you could end up with a big capital loss and little income, like recent shareholders of Blackmores Limited (ASX: BKL) and TPG Telecom Ltd (ASX: TPM).
Perhaps the way to combat this in these uncertain times is by buying stocks that have high dividend yields, and potential to grow the share price. If a stock has a gross yield of 7.5% or more, the share price only has to grow by 2.5% or less to achieve the average 10% return.
Here are three stocks with high yields that could beat the market average:
Westpac Banking Corp (ASX: WBC)
Westpac is Australia's second largest bank with a market capitalisation of $108 billion. Although its share price has fallen over the last two years, like the other big four banks, it has remained reliable with its dividend and underlying cash earnings.
In its latest report to 30 September 2016 it revealed that cash earnings were flat and the dividend was held steady. This was pleasing compared to Australia and New Zealand Banking Group (ASX: ANZ), which saw cash earnings down 18% and the dividend dropped by 12%.
If interest rates do rise, then Westpac could be a major beneficiary as it may earn more on the loans it has given out.
Westpac is trading at 13.3x FY17's estimated earnings with a grossed up dividend yield of 8.31%.
Suncorp Group Ltd (ASX: SUN)
Suncorp is one of Australia's largest insurance groups with a market capitalisation of $17.3 billion.
It has a large stable of different brands such as landlord insurance specialist Terri Scheer, motor enthusiast insurance Shannons, low-cost car insurer Bingle and home & motor insurer AAMI.
The big storms over the last two years in Brisbane and Sydney haven't been kind to Suncorp's claims division, however profits could be about to pick up for Suncorp, QBE Insurance Group Ltd (ASX: QBE) and Insurance Australia Group (ASX: IAG).
Whilst new competitors were arriving into Australia, like Youi, they were trying to win business by offering the lowest prices which caused the whole industry to compete on price. However, now that they have an earnings base, the new competition is starting to raise prices which mean the whole industry can too.
Suncorp is trading at 14.3x FY17's estimated earnings with a grossed up dividend yield of 7.21%.
G8 Education Ltd (ASX: GEM)
G8 Education is one of Australia's largest childcare centre groups with a market capitalisation of $1.4 billion.
Its share price has been quite the rollercoaster over the last few years, as it grew through acquisitions but then was seen to be too risky with how much debt it had taken on and how much profit it was paying out in dividends.
G8 recently revealed to the market that it expects its full year earnings before interest and tax to be essentially flat for the year. Although this isn't a great result, it means it can maintain the dividend that it's paying of 6 cents per share each quarter.
G8 Education is trading at 14x FY17's estimated earnings with a grossed up dividend yield of 9.44%.
Foolish takeaway
It's impossible to say where the share market is going to move in the short term. However the above companies have a good chance of maintaining or increasing their large dividends over the next 12 months.
The above three businesses aren't the only ones with juicy dividends, these three stocks could also be the dividend payers you're looking for.
