Do Penny Stocks Really Pay Dividends?
With the dividend penny stock, we’re looking for that home run buy.
We’re looking for a stock that will provide us two big types of returns, cash from dividends… and cash from the stock price going up!
With the penny stock we’re looking for the home run investment. We’re looking for that lottery ticket to pay off. We’re looking for a stock that can return to us 1,000%, 2,000% or more. You want to find something with the home run potential… something that will pay off in a big way.
When you buy a penny stock, you’ve got to think of it like a lottery ticket.
First, you don’t invest your life savings in the penny stock – no way. You put in a little play money. Money you can afford to lose if the investment goes bad.
Let’s jump in and look for a lottery ticket dividend penny stock.
I went over to finviz, and started screening for the perfect investment. To start, there are 4,982 stocks in the database… (Thank god for the screener!)
The first thing I did was screen for stocks with a dividend yield over 0%… Why over Zero?
Because any stock, no matter how small the dividend, should be included in this screen. Just that one metric dropped the number of companies down to… 2,332… still lots of choices.
I’m looking for penny stocks… and to me that’s any stock trading for less than $2.00 a share. The next stop, screen out any stock over $2.00 a share. After running the screen, I was left with 34 dividend penny stocks.
34 stocks with a dividend yield over 0% and a stock price below $2.00
Now comes the research. The first research step is to look more closely at each company. Now sometimes your data will be a bit out of date. That means you might find a stock or two who cut their dividend… or the stock price is higher than you expected.
Start Eliminating Dividend Penny Stocks
So, these are the stocks we kicked to the curb because they suspended or have not paid dividends recently.
EXCO Resources Inc. (XCO)
TheStreet, Inc. (TST)
Sypris Solutions Inc. (SYPR)
Safe Bulkers, Inc. (SB)
Pacific Coast Oil Trust (ROYT)
Penn West Petroleum Ltd. (PWE)
Iao Kun Group Holding Company Limited (IKGH)
Hugoton Royalty Trust (HGT)
Global Ship Lease, Inc. (GSL)
Golden Ocean Group Limited (GOGL)
Gerdau S.A. (GGB)
Foresight Energy LP (FELP)
China Green Agriculture, Inc. (CGA)
China Ceramics Co., Ltd. (CCCL)
Bon-Ton Stores Inc. (BONT)
Azure Midstream Partners, LP (AZUR)
Atlas Resource Partners, L.P. (ARP)
Vanguard Natural Resources, LLC (VNR)
Gafisa S.A. (GFA) GFA – Non Pay
This is crazy, 19 of the 34 stocks listed in my screen had stopped paying or recently suspended the dividend. This proves the importance of doing a bit of diligence and looking at the company details BEFORE diving too deep into your research.
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I was able to disqualify more than 50% of the dividend paying penny stocks in my screen before I even started my research!
The next screen was for quality.
Just because you want to buy a penny stock doesn’t mean you need to sacrifice quality. I did a little digging and decided to kick out dividend paying penny stocks that were losing money… or paid a dividend less than quarterly.
United Microelectronics Corporation (UMC)
Pingtan Marine Enterprise Ltd. (PME)
LRAD Corporation (LRAD)
Harte-Hanks Inc. (HHS)
U.S. Global Investors, Inc. (GROW)
Deswell Industries, Inc. (DSWL)
Diana Containerships Inc. (DCIX)
Wheeler Real Estate Investment Trust, Inc. (WHLR)
Valhi, Inc. (VHI)
That left us with a handful of Dividend Penny Stocks to pick from.
Companhia Energética de Minas Gerais S.A. (CIG)
ECA Marcellus Trust I (ECT)
Institutional Financial Markets, Inc. (IFMI)
Navios Maritime Acquisition Corporation (NNA)
Overseas Shipholding Group Inc. (OSGB)
SI Financial Group Inc. (SIFI)
Six dividend paying penny stocks… Which would you pick?
The one I dividend penny stock I picked… the business was improving, Debt to EBITDA ratios were getting better, and their operational costs are below industry averages. I think its a stock in a turnaround, that can pay out very nicely. Download my free report “The Ultimate Guide to Dividend Investing” to get the name of this hot penny stock!
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