Top 10 High Dividend Paying Penny Stocks

The Indian stock market has witnessed a record rise in the number of market participants in the past few years. Many new investors enter the stock market in search of quick returns, but there are few investors who wish to hold stocks for the long term and earn a dividend income along the way. The annual returns increase substantially if the stock is a penny stock, as these stocks can deliver multi-bagger returns. 

In this blog, we will give you an overview of the top dividend-paying penny stocks, their benefits, and disadvantages.

What are the High Dividend Penny Stocks?

Stocks with extremely low prices and high dividend yields are referred to as high-dividend penny stocks. These stocks offer high dividends with the potential to deliver multi-bagger returns in the near future. However, these stocks are highly risky, and investors must ensure whether or not high dividends are supported by strong financial performance. Investors who are thinking about purchasing high-dividend penny stocks should be aware that doing so could result in losses because the shares of these companies are less liquid and have higher volatility than other equities. 

List of Penny Stocks That Pay Dividends 2024

Highest Dividend Paying Penny Stocks – An Overview

An overview of the Highest Dividend Paying penny stocks is given below:

• Taparia Tools Limited – In 1969, the company was founded to produce hand tools for the Indian market. The company was the result of a technical collaboration with Bahco, a Swedish company. The company’s ISO 9001 certification guarantees the company’s commitment to superior production quality. To ensure a consistent supply of goods, the corporation has a wide network of dealers around the nation. By offering almost a thousand different kinds of hand tools, the company can meet the demands of a wide range of industries. The company’s main office is located in Mumbai. 
• Gujarat Toolroom Limited – Gujarat Toolroom Limited was founded in 1983 under the name Pirnmatic Engineering Private Limited to produce alternatives to imported textile machines. The slump in the Indian textile sector from 1984 to 1986 caused the company to change its focus from textile machines to the plastic industry. In 1990, the company amalgamated with Kunal Fabricators Private Limited. In 1991, it became a public limited company and changed its name to Gujarat Toolroom Limited. The face value of the company’s equity dropped from INR 10 to INR 1 during a 10:1 stock split. The company’s head office is located in Ahmedabad, Gujarat. 
• Gothi Plascon Limited – In 1994, the business was established as Gothi Plascon (India) Ltd., a public limited company. Initially, the company’s primary focus was on producing disposable plastic goods. In response to the shifting market dynamics, the company strategically shifted its focus to the real estate sector. Its primary source of income comes from renting out buildings. Gothi Plascon (India) Limited’s main office is located in Puducherry. 
• Ujjivan Small Finance Bank Limited– The bank was established in 2016 as a subsidiary of the microfinance firm Ujjivan Financial Services Limited, later becoming a prominent small finance bank in India. The Reserve Bank of India granted it a license to operate as a small finance bank in 2017, and later, in 2019, the bank was listed on the Indian Stock Exchange. The bank primarily caters to the underserved segment while also providing services to the retail market. The bank has been focusing on enhancing its digital banking services to better serve its customers. The company’s main office is located in Bengaluru. 
• Saven Technologies Limited – The company was founded in 1993 and specializes in technology services, including the design, development, and implementation of technology-based solutions. It has a strong service delivery record. The company has branches in the United States and the United Kingdom. Its employees are highly qualified and proficient in offering innovative solutions. The company’s headquarters are located in Hyderabad.

• Radiant Cash Management Limited – The company is an integrated cash logistics service provider with a focus on retail cash management. It was founded in 2005 by Colonel David Devasahayam. It offers a range of services, including cash pickup and delivery, ATM management, cash van rental, and network currency management. The company went public with its initial public offering (IPO) in December 2022. Operating a fleet of over 750 vehicles and more than 5,000 locations, it processes more than INR 500 crore of cash daily. The company’s headquarters are located in Chennai.

• Vibrant Global Capital Limited – The company was founded in 1995 and was then known as Raisoni Finance Pvt. Ltd. It was a non-banking financial organization that was involved in lending, manufacturing of iodized salt, and trading in steel products and polyester films, among other things. The business changed its name to Vibrant Global Capital Limited in 2010 to better reflect its diverse operations. The head office of the organization is located in Mumbai. 
• Yug Decor Limited – Yug Decor Limited was founded in 2003 and produces adhesives under the YUG-COL brand. Among their many products are resin adhesives, natural rubber adhesives, synthetic binders, etc. In 2017, the business made its initial public offering (IPO) under the Small and Medium-sized Enterprises (SME) category. Chandresh S. Saraswat, the company’s chairman, has over 33 years of experience in the plywood and adhesive industry. Clients of Yug Décor are present throughout Asia, Europe, Africa, Bangladesh, Dubai, and other places. Its main office is located in Ahmedabad. 
• Advani Hotels & Resorts (India) Limited – When the company was founded in 1987 by Haresh G. Advani and Sunder G. Advani, it was called Ramada Hotels (India) Limited. The company launched its IPO in 1989, and later, in 1999, it changed its name to Advani Hotels and Resorts (India) Limited. The corporation owns and operates Caravela Beach Resort in Goa. The company’s headquarters are located in Mumbai. 
• Poojawestern Metaliks Limited – The firm was established in 1991 and started manufacturing, importing, and exporting brass products. The company imports a variety of items, including brass ingots, plumbing sanitary fittings, etc. The company can produce 5000 kg of brass hollow bars and solids daily. The company has clients in the Gulf and America. The company was listed on the Indian Stock Exchange in 2017. The company’s headquarters is located in Jamnagar, Gujarat.

Key Performance Indicators (KPIs)

Benefits of Investing in High-Dividend Penny Stocks

There are numerous benefits of investing in high-dividend penny stocks, a few of which are mentioned below-

1. Affordability – Penny stocks have lower share prices, which allows an investor with limited funds to invest.

2. Potential High Returns – The penny stock companies have higher growth potential, which can provide higher investment returns.

3. Diversification – Investors can easily diversify their portfolio by investing in penny stocks; however, one should consider their risk profile before investing.

4. Possibility of Acquisition– Generally, small companies are an acquisition target of more established companies in that sector. When these small companies are acquired, the shares of the target company increase in value.

5. Dividend – These penny stocks or companies have historically paid high dividends apart from capital appreciation.

Disadvantages of Penny Stocks That Pay Dividends

The significant risks related to investing in penny stocks, which pay dividends, are as follows-

1. Financial Instability – The financial performance of smaller companies may not be strong, which means they may not be able to distribute dividends in the long run.

2. Volatility – Penny stocks are considered more volatile as these stocks can be particularly targeted by speculators.

3. Lack of Liquidity – Generally, penny stocks lack liquidity and have low trading volume, which makes it difficult for investors to buy and sell shares.

4. Lack of Information – Most penny stocks have limited publicly available information, which makes the process of analyzing them more difficult.

5. Frauds – Penny stocks are generally manipulated by the promoters or other big investors. They can be a part of a pump-and-dump scheme. 

How to Invest in High-Dividend Penny Stocks?

One can easily invest in high-dividend penny stock companies by following the steps mentioned below-

• Visit the website of Pocketful.
• Click on the “Open Demat Account” Tab.
• Complete your KYC and fill in all the relevant details, such as name, e-mail ID, and mobile number. Enter the OTP received to verify the information provided.
• Submit the bank details and upload the scanned copies of documents, including PAN card, identity proof, address proof, income proof, etc.
• Next, you will be asked to complete the in-person verification process using a webcam or smartphone. E-sign the demat account opening form to complete the application process.
• After successful verification, you will receive the login credentials on your registered mail ID.
• Revisit the website and click on the Login Section on the Home Page.
• Log into your demat account and begin investing.

Conclusion

On a concluding note, investment in dividend-paying penny stocks can be an investment option for investors who are looking for income in the form of dividends. However, there are certain risks involved while investing in penny stocks, such as lack of public information about the companies, illiquidity, etc. It is always suggested that you must consult a financial advisor before investing in penny stocks.

Frequently Asked Questions (FAQs)