Alex Sirois
·4 min read
Penny stocks are generally high risk, speculative stocks in which to invest. Most are growth oriented and thus tend not to pay dividends. The shares discussed in this article are dividend-paying penny stocks. In fact, their dividends yield more than 8%.
Before reading on, let’s set some ground work here. The definition of a penny stock varies from shares below $1 to those below $5 to those below $10 in some cases. This article will take that more liberal definition with one of the shares trading for nearly $8. The other two trade for less than $4.
Investors in penny stocks seek quick returns. Those who consider these stocks are seeking the same result. The shares below are expected to grow, sometimes dramatically. Yet, at the same time, they also provide substantial income through their respective dividends. Let’s take a look at these dividend-paying penny stocks.
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Sasol (SSL)
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Sasol (NYSE:SSL) is the most expensive choice in dividend-paying penny stocks discussed in this article. It trades for less than $8 and is considered an oil major. The firm is an integrated energy and chemical company headquartered in South Africa.
First things first, investing in Sasol is very clearly a high-risk endeavor. Lots of metrics support that notion. For one, the stock carries a beta of 2.28, meaning it moves 2.28 times more quickly than the average stock overall. Further, its dividend is not particularly stable and it was last reduced in 2023. Yet, today it continues to pay a semi-annual dividend yielding nearly 12%.
Essentially, the company will continue to face volatility on multiple fronts across its business segments in 2024. The company’s energy and mining segment is facing a difficult-to-assess market outlook. Currently, the company is dealing with lower oil and petrochemical prices paired with inflationary pressure. The company’s chemicals business is facing a steep decline in average market basket prices to the tune of 24%. The overall look there is relatively bleak. Yet, the company’s opportunity lies in rapidly increasing prices for oil and petrochemicals. The energy market is particularly unstable at the moment and that could shift in Sasol’s favor at any moment.
Enel Chile (ENIC)
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Enel Chile (NYSE:ENIC) is a much more stable choice than Sasol for investors seeking a high-yield dividend stock. ENIC shares are bolstered by a beta of 0.72, which implies much greater stability overall. The fact that it’s an electric utilities company makes it inherently more stable. Consumption dynamics for electricity are much more predictable than are those in the energy industry. Utilities firms also tend to have near monopoly status over their geographic regions, meaning competition is very low. The result is an overall firm which is usually quite steady.
Like Sasol, Enil Chile pays a dividend yielding nearly 12% which is paid on a semi-annual basis. Those payout yields are notguaranteed though, as the company reduced its dividend in 2022.
That said, the company’s fundamental situation continues to improve. Its EBITDA increased by 56% during both the third quarter and the first nine months of 2023. It is also the largest utility firm in Chile, based on installed capacity and client count.
Medical Properties Trust (MPW)
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Medical Properties Trust (NYSE:MPW) stock continues improving, following the release of its Q4 and FY results on February 21. Shares rose more than 5% in the wake of the company’s earnings announcement.
Part of the reason for the positivity relates to the fact that the company is profitably divesting itself of five hospitals soon. That divestiture is expected to produce a cap rate of 7.4% and proceeds of $17 million. Cap rate is simply the rate of return that a given piece of real estate is expected to generate.
The divestiture and its strong cap rate are an indication that Medical Properties Trust is a company that is capable of successfully investing in hospital assets and essentially flipping them profitably.
Dividend investors will be particularly interested to note that the company includes a dividend that currently yields more than 15%. Shares currently trade for slightly under $4 and it appears that the company may be out of the woods overall. The company is the biggest hospital landlord in the U.S. and had faced trouble late in 2023. It appears to be doing much better based on recent results.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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