Penny Stocks Too Risky for You? Here Are Alternatives to Penny Stock Investing
Penny stocks are often seen as speculative investments, but some do offer dividends, allowing investors to receive dividend income while waiting for potential stock price appreciation. Discovering dividend-paying penny stocks can be an excellent strategy to balance growth and income.
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In this article, we will explore penny stocks that offer dividends, how to locate them, and the benefits they can provide from 2024 onwards.
Dividend stocks are shares of companies that pay dividends to shareholders. Bigger companies like those in the FTSE 100 pay dividends consistently but some penny stocks pay dividends too so investors get dividend income while waiting for stock price to appreciate.
For example Vodafone, British American Tobacco and Phoenix Group Holdings are in the FTSE 100 and pay dividends above 6%. But cheap dividend stocks and penny stocks with dividends may also be attractive to investors who want low cost entry but still get dividend payments.
While it may be rare, there are penny stocks that pay dividends. These stocks are usually in more established sectors like energy or financial services where cheap stocks can still generate income through dividend payments.
Dividend paying penny stocks offer something unique, growth and income. Here’s why they’re worth considering:
These stocks give you dividend income while you wait for potential capital gains so you can get a return even if the stock price is flat or volatile.
Penny stocks can have dividend yields higher than big cap stocks. Investors can get cheap stocks with high dividends to boost income and take on some risk.
Finding penny stocks that pay dividends monthly is rare but possible. Some near-penny stocks pay monthly dividends so it’s worth looking into.
Investing in penny stocks that pay dividends can be profitable but it comes with risks:
These stocks are highly volatile and if the company is having financial difficulties it may cut or eliminate dividends. Investors should monitor each company’s dividend payout ratio and cash flow to ensure dividend payments are sustainable.
As with any penny stock, prices can move wildly so they are prone to price manipulation and rapid losses. This volatility can offset the dividend payments.
Less common but penny stocks with dividends offer a great opportunity for investors looking for dividend income and capital growth. By looking at cheap stocks that pay dividends especially in established sectors like energy and financial services, you can get high dividend yields and low cost entry points.
But research the company’s financials and dividend history to ensure sustainable payouts. With the right approach, dividend paying penny stocks can be a great addition to your portfolio.
Yes, some penny stocks especially in energy and financial services pay dividends. Examples are Lloyds Banking Group and Diversified Energy.
Use stock screeners on Yahoo Finance or Trading 212 to filter for dividend paying penny stocks by share price and dividend yield.
Dividend cuts due to financial difficulties, high volatility and low liquidity.
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