Best Penny Stocks with Dividends

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Contributor, Benzinga
June 18, 2024

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Great profits come with great risk. This is especially true when you trade penny stocks of companies with small capitalizations. In your search for cheap stocks with high dividends, you can both diversify your portfolio and increase your net worth.

With penny stocks that are generally under $5 per share, you can double your money or lose twice as much as you’ve invested overnight or even on the same day. Some become growth stocks, but others might not. That’s why niche traders have learned to invest in cheap dividend stocks as an alternative to offset short-term market disruptions while securing their future at the same time.  

Quick Look at the Best Stocks With Dividends:

Pitney Bowes Inc. is a shipping and mailing company that provides technology, logistics and financial services to small and medium-sized businesses, large enterprises, retailers and government clients in the US, Canada and internationally, operating through Global Ecommerce, Presort Services and Sending Technology Solutions (SendTech Solutions) segments.

Chesapeake Granite Wash Trust is a Delaware trust formed by Chesapeake Energy Corporation. It owns certain royalty interests in oil and natural gas wells in Washita County, Oklahoma. Chesapeake Granite Wash Trust also produces oil and natural gas from the Colony Granite Wash Play within the broader Granite Wash formation in the Anadarko Basin.

Founded in 1856, Banco Santander S.A. is a global financial services company. It provides various retail and commercial banking products and services to individual, small, medium and large companies worldwide. Banco Santander also provides cash management, payrolls and wealth management services.

Ambev S.A. and its subsidiaries produces and distributes beer, draft beer, carbonated soft drinks, other non-alcoholic beverages, malt beverages, and other food products. Brands under its umbrella include Skol, Brahma, Antarctica, Brahva, Budweiser, Bud Light, Beck, Leffe and Hoegaarden, Bucanero, Cristal, Mayabe, Presidente, Presidente Light, Brahma Light, Bohemia, The One, Corona, Modelo Especial, Stella Artois, Quilmes Clásica, Paceña, Taquiña, Huari, Becker, Cusqueña, Michelob Ultra, Busch, Pilsen, Ouro Fino, Banks, Deputy, Patricia, Labatt Blue, Alexander Keith’s, Kokanee, Guaraná Antarctica, Gatorade, H2OH!, Lipton Iced Tea, Fusion, Do Bem, Pepsi-Cola, Canada Dry and Squirt.

Why Buy Penny Stocks With Dividends?

Owing to illiquidity in the stock market, cashing in on penny stocks despite their improved performance can be a challenge. Yes, there are cheap stocks with high dividends, but you cannot always buy and sell these stocks at a moment’s notice. A diverse penny stock portfolio that offers dividend payments can, however, be a consolation to your woes till your brokerage accounts can fill other orders. 

Any micro-cap company that provides dividends on its penny stocks is an indication of growth. Unlike medium- and large-cap enterprises that run the risk of diluting the value of each share, startups and nano-cap companies stand to gain stock value over regular dividends. These penny stocks can become a reliable source of income for you as canceling dividends can seriously tarnish the reputation of up-and-coming companies, urging investors to trade penny stocks on a whim. Yes, dividend income is a good thing, but you must seek out that income wisely. 

Best Online Brokers

Before you go looking for the companies and their tickers on the NASDAQ and NYSE, you need to know how to trade penny stocks. If you can’t find any penny stocks on the national stock exchange or NASDAQ, it's because companies with a stock value below $1 are found on Pink Open Market or OTC Markets Group (OTCBB). 

Penny stocks are known to be extremely volatile (with dividend yields being rare) and can shoot up their value by 100% or more in a matter of minutes. Similarly, it can also crash and drop the company’s stock price in the blink of an eye. In like manner, dividend increases can come and go just as quickly.

An online broker can help you identify the best penny stocks to trade. Be aware that some brokers don’t extend the $0 commission rate on unlisted stocks and will apply an additional fee for trading penny stocks. Make sure you ask all the questions listed below before signing up for an online broker. You can look at share prices later because you need a quality portfolio manager, a collection of cash dividends to learn into and an understanding of how Wall Street operates.

Brokerage Criteria for Penny Stocks

  • What is the upper limit on penny stock valuation? Is it $5, $3 or $1?
  • Are there subcharges involved in penny stock trading?
  • Is there a flat-fee on penny stock trades? 
  • Is there a limit on the number of penny stocks traded in a day? 
  • Are there charges for withdrawals? 
  • Can stockholders view the trading history of penny stocks?

Once you are absolutely clear on these criteria and how they line up with your investment strategy, you can select the online broker that is right for you. Benzinga recommends you start your investment journey by trading penny stocks on these top-notch online brokers. Investing with the right broker is often just as important as the amount you’re paid in dividends every quarter.

Penny for Your Trades

Companies listed on national stock exchanges must provide financial information to the SEC about their assets, liabilities and periodic performances. Penny stock companies listed on Pink Open Market and bulletin boards are not required to share that information with the SEC, therefore any data regarding its business health and growth can be scarce. The dividend fund may not be sustainable, especially with proposed dividend increases, or the payout ratio may fluctuate. You must do your due diligence because these stocks don’t have a track record to fall back on.

If you are taking your first steps toward investing, penny stocks are not for you. The low cost per stock can seem appealing when you have low cash flow but are not appropriate for traders with low-risk tolerance. Before you search for cheap stocks with high dividends, you should consider taking penny stock courses to gain the skills required for successful trading and dividend investing.  

Frequently Asked Questions

Q

What are penny stocks with dividends?

A

Pennyy stocks with dividends are shares of companies with a small market capitalization that offer dividends.

Q

Why penny stocks with dividends?

A

Penny stocks with dividends can help offset the vovlitlity of penny stocks by offering a dividends, which makes day trading penny stocks or saving for the future easier.

Q

Which penny stocks with dividends are the best?

A

You can find a list of great penny stocks with dividends on the list above.