Top 3 dividend-paying penny stocks to buy in Canada

Highlights 

  • The below-mentioned penny stocks have dividend-paying histories, with a dividend yield of 17.78 per cent posted by one of these stocks.
  • The highest ROE among the listed companies was 69.74 per cent.
  • In Q2 FY21, one of the companies posted revenue growth of 45.8 per cent YoY.

Penny stocks trade at a lower price band and a market capitalization of close to C$ 300 million. These stocks are listed on the Toronto Stock Exchange (TSX) and the TSX Venture Exchange (TSXV) and are sector agnostic.

Aberdeen Asia-Pacific Income Investment Company Ltd., one of the penny stocks mentioned here, posted a quarter-to-date (QTD) return of 11.64 per cent, which is much higher than the QTD return of 2.6 per cent posted by the S&P/TSX Composite Index and also higher than that of the return posted by the S&P/TSX Venture Composite Index. Also, the highest dividend yield held by one of these penny stock companies was 17.78 per cent.

On that note, let us explore dividend-paying penny stocks.

  1. Newport Exploration Ltd. (TSXV: NWX)

The dividend-paying metal and mining company produces oil and gas in Australia and has a mining operation located in Canada. The shareholders of Newport Exploration are expecting quarterly dividends of C$ 0.02 per share to be paid on September 10, 2021. The dividend yield was 17.78 per cent on September 1, 2021.

The mining company posted a price-to-earning (P/E) ratio of 11.3, a return on equity (ROE) of 69.74 per cent, and held a market cap of C$ 47.51 million on September 1, 2021.

The stock price of Newport Exploration closed at C$ 0.45 on August 31, 2021, and traded close to 34 per cent above its 52-week low of C$ 0.34 on this day. The one-year stock price return was roughly 15 per cent.

In the third quarter of the fiscal year 2021, Newport Exploration posted a petroleum royalty income of C$ 2.68 million and a net income of C$ 1.57 million in the same quarter.

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Also Read: 3 best ethical penny stocks to buy now for responsible investing

  1. Aberdeen Asia-Pacific Income Investment Company Limited (TSX: FAP)

With a market cap of C$ 162.89 million on September 1, this asset management company provides investment opportunities in debt securities. Aberdeen Asia-Pacific paid its monthly dividends of C$ 0.022 on August 31, 2021. Its current dividend yield stands at 8.28 per cent.

At the close of the market on August 31, stocks of Aberdeen Asia-Pacific were priced at C$ 3.21. It reached its 52-week high of C$ 3.36 on January 19, 2021. The stock returned nearly nine per cent over the past year, but stocks returned close to 12 per cent on a quarter-to-date (QTD) basis.

On the valuation front, the asset management company posted earnings per share (EPS) of 0.34, ROE of 8.96 per cent, and P/E ratio stood at 9.4 on September 1.

Also Read: 8 dirt cheap penny stocks to buy

  1. Diversified Royalty Corp (TSX: DIV)

The royalty company acquires royalty from franchisors and firms in North America, thereby generating revenue from management fees and royalties. Diversified Royalty held outstanding shares of 121.94 million and a market cap of C$ 346.3 million (at the time of writing).

The shareholders of Diversified Royalty were issued monthly dividends of C$ 0.018 on August 31, 2021, with a dividend yield of 7.39 per cent on September 1.

The company posted a price-to-book (P/B) ratio of 1.81, ROE of 3.55 per cent, and ROA of 1.91 per cent on the valuation front.

Diversified Royalty posted revenue of C$ 9.2 million in Q2 FY21, up 45.8 per cent Year-over-Year (YoY). The distributable cash was C$ 6.8 million in the same quarter.

Bottom line:

Considering the fluctuations and volatility in the market, some investors fear investing in penny stocks. In contrast, some investors believe that as these stocks have lower prices and market cap, they can explode in the future.

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