7%+ yields! 3 big-dividend penny stocks to consider in September

Paul Summers picks out three penny stocks that could prove excellent medium-to-long-term picks for risk-tolerant Fools.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Stacks of coins

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

As well as having the potential to transform my wealth, some penny stocks have excellent income credentials.

Here are three I’d feel comfortable buying now, spare cash permitting.

Premier Miton

Like its industry peers, fund manager Premier Miton‘s (LSE: PMI) share price is in the doldrums. A 30% fall in 2023 alone is enough to make anyone invested want to throw in the towel.

Should you invest £1,000 in Tritax EuroBox right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tritax EuroBox made the list?

See the 6 stocks

However, those who subscribe to the view that those in this space could do well as and when confidence returns to the market (and I do), now could be the time to pounce.

While not the lowest valued company in its space, a price-to-earnings (P/E) ratio of 11 remains reasonable.

However, investors shouldn’t be blasé about how tricky things currently are… and might be for a while yet. Premier already announced Q2 outflows of £449m in July, due to investors getting skittish about inflation and the economic outlook in general.

Even so, expectations in this part of the market are so low that it might only take a small chink of sunlight for the share price to rocket.

In the meantime, there’s a potential 7.5% dividend yield to keep me happy.

Tritax Eurobox

A second penny stock I’d be comfortable buying now is warehouse and logistics specialist Tritax Eurobox (LSE: EBOX).

Like its UK-focused big brother Tritax Big Box, this real estate investment trust (REIT) has endured a tough couple of years. In fact, the shares are continually setting record lows.

Realistically, there could be more pain to come if interest rates continue to rise. That’s generally not ideal for any company invested in property and with rising debt on its balance sheet.

Then again, a 37.5% discount to net asset value implies an awful lot of this is already factored in. I also struggle to see how the longer-term outlook isn’t positive. Demand for the sort of assets it owns is only likely to rise due to the ongoing growth of e-commerce.

The monster 8.2% dividend yield is another attraction, although I wouldn’t rule out a cut.

So long as I spread my money around multiple stocks, I reckon the risk/reward trade-off here is now in my favour.

ITV

A final stock I’d be interested in acquiring isn’t, admittedly, a market minnow. It’s broadcaster ITV (LSE: ITV). However, its shares have traded for pennies rather than pounds since March 2022.

Like the other companies mentioned here, things are hardly firing on all cylinders at the FTSE 250-listed firm. A fall in advertising spend by businesses is impacting ITV’s top and bottom lines. Accordingly, analysts are expecting a big reduction in earnings growth in 2023 before things get back on track next year.

And while the company is focusing on expanding its digital services, it will never compete with streaming giants like Netflix. That expansion won’t come cheap either.

But there are some things to like. I’ve long believed the company’s production arm — ITV Studios — to be undervalued by the market. Revenue here rose 8% in the first half of the year.

The passive income stream also appeals. A chunky 7% dividend yield looks safely covered by profit and should be sufficient compensation for being asked to wait for a share price recovery.

Created with Highcharts 11.4.3ITV PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV and Tritax Big Box REIT Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Group of young friends toasting each other with beers in a pub
Investing Articles

1 Warren Buffett stock I’m staying well away from

Warren Buffett’s Berkshire Hathaway has been buying shares in Constellation Brands recently. But Stephen Wright prefers its FTSE 100 counterpart.

Read more »

Santa Clara offices of NVIDIA
Investing Articles

Nvidia stock just hit an all-time high. So could it still make sense to buy?

Nvidia stock has hit an all-time high today. Our writer reckons it may still be cheap from a long-term perspective.…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

As Rolls-Royce shares smash record after record, could they be a bargain even now?

Rolls-Royce shares have performed incredibly in recent years. This writer reckons they may yet go even higher -- here's his…

Read more »

Mature black woman at home texting on her cell phone while sitting on the couch
Growth Shares

2 UK stocks that could be under pressure if fiscal problems keep rising

Jon Smith talks through a couple of UK stocks that he thinks could be under pressure if the government change…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

2 FTSE 100 shares with low P/E ratios! Which should I consider buying?

I'm hunting for the best UK value shares to buy this July. Here are a couple from the FTSE 100…

Read more »

Young Caucasian woman holding up four fingers
Investing Articles

4 stocks I bought for my Stocks and Shares ISA in June!

Our writer reveals what he thinks is the most exciting from the four investments he made in his Stocks and…

Read more »

Close-up of British bank notes
Investing Articles

5 dividend shares yielding 5.9%+ to consider in July

Christopher Ruane discussed a handful of FTSE dividends shares yielding close to 6% or higher that he reckons investors should…

Read more »

Branch of NatWest bank
Investing Articles

Up 50% in just 1 year, can the NatWest share price keep going?

Christopher Ruane looks at a couple of ways to evaluate the Natwest share price and decide whether it offers a…

Read more »