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These are the tiniest companies on the JSE - with the biggest dividends

by , 11 December 2015

Right now, you're facing an incredible opportunity.

You've got the chance to buy a handful of top quality, penny shares on the JSE right now, all at a steal.

These companies are so cheap, they're selling at multiple times the average dividend yield of the average JSE share.

But it won't be that way for long. So listen up. This is what you need to do…

The JSEs smallest companies are offering the best dividends

Traditionally penny shares haven’t been associated with dividends. They’re small, growing companies. They use all their cash to encourage more growth. And more often than not, penny shares are ‘fallen angels’ trying to pick up the pieces after a crash.

But not right now.

You see, at the moment there are a handful of high quality penny shares on the JSE. I’m talking small-cap companies that survived the 2008 financial crisis and the 2013-2015 resources crash.

These companies have weathered the storms thrown at them and survived through difficult times.

And thanks to that they’ve emerged stronger than ever – and growing at a fast pace to boot.

You see, right now the JSE’s Top 40 shares, the 40 largest shares by market capitalization on the JSE, are on an average dividend yield of 3.26%.

So for every R10,000 invested in them you’d make R326 in dividends per year.

The JSE’s Small-Cap Index on the other hand has a ten-year average dividend yield of 3.63%, which is around 10% higher.

In down markets, like the one we’re experiencing now, shares that pay dividends are all important. It ensures you get growth on your shares. It’s also a sign of a confident management team that knows they’ll grow the business they’re managing!

So I often look for the top dividend payers on our market for my Red Hot Penny Shares newsletter.

And boy have the dividends been flowing in lately!

The best dividend paying penny shares on our market right now
Company Name Sector Dividend Yield
ACCPROP Real Estate Investment Trusts 8,71%
ALTRON Electronic & Electrical Equipment 5,64%
AMECOR Electronic & Electrical Equipment 8,42%
ARGENT General Industrials 6,50%
ARROWA Real Estate Investment Trusts 8,45%
ASCEN A Real Estate Investment Trusts 5,66%
COGNITION Software & Computer Services 6,22%
COMAIR Travel & Leisure 5,98%
DELPROP Real Estate Investment & Services 11,67%
EQSTRA General Industrials 18,46%
FAIRVEST Real Estate Investment Trusts 9,16%
HULAMIN Industrial Metals & Mining 6,11%
INSIMBI Industrial Metals & Mining 5,36%
ISA AltX 5,56%
M&R-HLD Construction & Materials 6,33%
MAZOR Construction & Materials 5,83%
NEDBANK-P Preference Shares 8,89%
PAN-AF Mining 7,64%
PRESCIENT Financial Services 5,91%
SA CORP Real Estate Investment Trusts 8,02%
SAFARI Real Estate Investment Trusts 8,24%
TEX Real Estate Investment Trusts 11,30%
TOWER Real Estate Investment Trusts 9,86%
VALUE Industrial Transportation 6,30%
VERIMARK General Retailers 12,73%
WINHOLD Support Services 7,00%
Average   8,08%

On this list you’ll see the top dividend paying penny shares on the JSE right now.

On average these 26 shares pay a dividend of 8.08%. That’s more than twice the average of the Small-Cap Index as well as the Top 40 Index.

R10,000 invested into these gets your roughly R808 a year in dividends!

While I wouldn’t put my money into all of these shares there are a number of them I really like.

companies like Safari, a real estate investment trust, which will grow dividends annually as its rentals go up by a guaranteed 9%.

Or asset manager Prescient, which is owned in majority by its CEO and other managers. They want the company to pay a big (yet sustainable) dividend because that’s the way they earn money from it. In fact Prescient’s CEO doesn’t earn a salary from the company – he is invested for dividends and growth on the company’s share price!

I often hear people say small caps are unsafe.

And that might be true for many share on the JSE. But when a company’s CEO is invested alongside you, and he’s so certain dividends and the share price will grow that he goes without a salary… Well who am I to complaint!

Dominating dividend growers will likely outperform the majority of shares over the next year.

There’s a lot of uncertainty on our market – and a dividend at least hands you something back in your hand.

Dividends are your protection from market downturns

Receiving dividends from your investments, especially small caps, provides you with much more downside protection in rough markets than shares that don’t pay dividends. It also provides you with a nice cash flow.

If you’d like to find out about the great value that can be found in the small cap market and how it can grow your portfolio check out my Red Hot Penny Shares newsletter. Considering the current market pull back and the high dividend yields you can get now it’s a golden opportunity to buy Dividend Machines at low prices!

Here's to unleashing real value

Francois Joubert

Editor, Red Hot Penny Shares

These are the tiniest companies on the JSE - with the biggest dividends
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