Right now the South African repo rate sits at a rock bottom 3.5% interest.
The interest I'm getting on cash in my brokerage account right now is a mere 2.18%.
Simply put - with interest rates this low you HAVE to look elsewhere for yield.
And it so happens that there are a handful of JSE listed penny stocks that are paying dividends up to double and even TRIPLE the current interest rate you can receive from the bank on your cash…
The best thing though - these shares still stand to grow in capital value as well!
Read: My top Five Penny Stocks to buy and Hold In 2021 – see here!
How do dividends work?
A dividend is paid per share of stock — if you own 30 shares in a company and that company pays R2 in annual cash dividends, you will receive R60 per year.
Usually, dividends are paid out on a company’s common stock. There are several types of dividends a company can choose to pay out to its shareholders:
Cash dividends: The most common type of dividend. Companies generally pay these in cash directly into the shareholder's brokerage account.
Stock dividends: Instead of paying cash, companies can also pay investors with additional shares of stock.
Special dividends: These dividends pay out on all shares of a company’s common stock, but don’t recur like regular dividends. A company often issues a special dividend to distribute profits that have accumulated over several years and for which it has no immediate need, or for instance if it has sold a large subsidiary and has excess cash.
Three penny stocks paying the most attractive
dividends right now
Dividend penny stock #1 – Afrocentric Investment Corp
Afrocentric is the next “Discovery” when it comes to healthcare. The company manages more lives through its medical aid management service than Discovery Health does. It has also bought niche insurance businesses to diversify its business, and owns its own medicine distribution and manufacturing business.
The company’s latest annualised dividends came in at 34cps – while its share price sits at 480c. That means a dividend yield of 7% - more than triple what a bank account will pay you right now!
Dividend penny stock #2 – Clientele
Clientele is a JSE listed insurance company that distributes, sells and underwrites insurance as well as selling investment products.
The company had a tough 2020, but revenue remained flat and it still managed to pay a massive 95c dividend on its current 960c share price.
That’s a dividend yield of 9.89% at present. So, you’re getting more than FOUR TIMES the interest I am getting on cash in a brokers account.
Dividend penny stock #3 – Hosken Passenger Logistics and Rail
Hosken is a transport company. Its main assets are the Golden Arrow Bus Services and a couple of other bus services.
Despite the 2020 lockdown, the company reported 23.16cps interim earnings per share – with an 18cps interim dividend. Its last full year dividend was 31cps.
That means a full year 2021 dividend of 49cps is possible. Perhaps more likely it will be 36-40c. No matter what happens – it means based on the current share price the company’s dividend yield will be in excess of 10%!
Imagine that – getting paid 10% a year in dividends and then there’s potential for the share price to rise as well!
Two more dividend paying penny stocks you should have your eyes on right now are Mahube, a renewable energy company that’s paying out a roughly 8% dividend yield per year and PBT group with a more than 5% dividend yield right now.
Companies like ARB Holdings, Bowler Metcalf and Trellidor might not be the biggest dividend payers right now, but are also on my radar with possibly large increases in their future dividends coming…
Here’s to unleashing real value
Editor, Red Hot Penny Shares