Investing in Dividend Stocks

Some companies provide dividends to stockholders, giving them passive income simply for holding the stock.

Are there penny stocks that pay dividends? Yes. Is that a good thing? The answer to that is more complicated.

Dividends in penny stocks are somewhat different from dividends in pricier stocks. If you want to know how penny stock dividends work — and why I don’t rely on them — keep reading.

Do Penny Stocks Pay Dividends?

Penny stocks don’t pay dividends at the same frequency as pricier stocks, but some do. A consistent payout is even less common — the penny stocks that offer dividends are either small companies that don’t make much money or struggling larger companies.

Penny stock companies don’t usually have the best cash flow or strongest balance sheets, so your earnings per share may be lower than stock in more established companies. And keep in mind that many of these companies are sketchy or outright scams — their dividends may become one more broken promise.

To fully understand the potential and risks here, it’s crucial to first grasp the concept of penny stocks in general. This comprehensive guide will provide you with the necessary foundation.

How Dividends Work

Dividends are paid to the shareholders for their investment in the company and usually come from its net profits. You can receive cash dividends or stock dividends, depending on the board of directors’ decision.

Dividend-collecting stocks are more of an investing choice than a trading style — although, as with everything in trading, you need to figure out the right approach for your personal goals and risk tolerance.

Companies across various investment sectors issue dividend-paying penny stocks for a multitude of reasons. It’s essential to understand the sector dynamics to make informed trading decisions.

How Often Do Penny Stocks Pay Dividends?

Different penny stocks pay dividends at different frequencies — mostly quarterly or annually, but some offer monthly dividends. A company can also pay special dividends outside of regularly-scheduled payouts.

Just remember, penny stock companies are notably unstable. It isn’t unusual for penny stocks to default on their planned dividends. If they are the kind of dividends you can count on, chances are that they won’t be the kind of sketchy penny stocks I like to trade!

This instability is why I never tell you to “hold and hope” with penny stocks. If you hold onto a penny stock expecting dividend yields, you’re hitching your trailer to a car somebody else is driving without knowing the destination.

I think the best way to know your own goals is to invest in your knowledge account. If you want to take a shortcut to all of the hard-fought lessons I’ve had to learn myself over my 20-plus years of trading… Join my Trading Challenge! It’s the curriculum I wish someone would have offered when I was learning the ropes, and trying to learn from my own mistakes.

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9 Penny Stocks That Pay Dividends

My dividend-paying penny stock picks are:

• (NYSE: ABEV) — Ambev SA — The Beer and Bottling Penny Stock
• (NYSE: BRMK) — Broadmark Realty Capital — The REIT Penny Stock
• (NYSE: KGC) — Kinross Gold Corporation — The Precious Metals Penny Stock
• (NYSE: PBI) — Pitney Bowes Inc. — The Meme-Ready Penny Stock
• (NYSE: LYG) — Lloyds Banking Group PLC — The British Banking Penny Stock
• (NYSE: MFG) — Mizuho Financial Group Inc. — The Japanese Banking Penny Stock
• (NYSE: NAT) — Nordic American Tanker Ltd. — The Oil Tanker Penny Stock
• (AMEX: EPM) — Evolution Petroleum Corp. — The Texas Oil and Gas Penny Stock
• (OTCQX: ALVOF) — Alvopetro Energy Ltd. — The Canadian Oil and Gas Penny Stock

Before you send in your orders, take note: I have NO plans to trade these stocks unless they fit my preferred setups. This is only a watchlist.

The best traders watch more than they trade. That’s what I’m trying to model here. Pay attention to the work that goes in, not the picks that come out.

Subscribe to my NO-COST weekly stock watchlist here!

While we’re discussing examples, it’s worth noting that the energy sector often presents intriguing opportunities. Check out these top 6 energy stocks to trade for some inspiration.

1. Ambev SA (NYSE: ABEV) — The Beer and Bottling Penny Stock

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My first dividend-paying penny stock pick is Ambev SA (NYSE: ABEV).

Since its parent company, InBev, merged with Anheuser-Busch to form Anheuser-Busch InBev in 2016, it’s tended toward annual dividends. But it assigned its largest dividend ever in December 2022 — over 5%!

This is nearly double the average yield for its sector…

But like most things in penny stock trading, I wouldn’t count on it lasting.

Dividend-paying penny stocks are different from most penny stocks, in that they are traditionally more stable… not that more stable means much in trading!

Take ABEV — despite its low share price, its cap size is enormous. That size translates into a float of more than 15 billion shares.

I like to trade low float stocks because they are more volatile — i.e., the opposite of stable. The market is basically a game of supply and demand. And it’s rare that trading pressure will force a price move in a 15 billion float stock.

That’s my perspective. I want you to form your own. And if it includes dividend-paying penny stocks, ABEV is one I would watch.

2. Broadmark Realty Capital (NYSE: BRMK) — The REIT Penny Stock

My second dividend penny stock pick is Broadmark Realty Capital (NYSE: BRMK).

If you like dividend stocks with high payouts, check out the REIT sector. Broadmark slashed theirs after falling into penny stock land in 2022 — and it’s still at almost 9%!

Here’s what else I like — BRMK’s share price bounced over 40% in 2023. Plus it pays its dividend out monthly, so you don’t need to hold it long to cash in.

But if you’re excited about the 3.5 cents it’s been paying out each month, you probably haven’t seen the way I built my account to $7.4 million.

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3. Kinross Gold Corporation (NYSE: KGC) — The Precious Metals Penny Stock

My third dividend-paying penny stock pick is Kinross Gold Corporation (NYSE: KGC).

KGC is engaged in the exploration and extraction of gold mines in the U.S., Brazil, Chile, Ghana, and Mauritania. It’s one of the largest gold mining companies in the world — although it also suffered in 2022, losing over 20% of its share price.

That isn’t the full story. Like many stocks, KGC has recovered in 2023. It bounced more than 70% from its July lows. That was when it bore the brunt of its Russian divestment — it had about $680 million in assets in Russia at the start of the year. When the dust settled, it only received $340 million.

It’s been somewhat generous in its dividends — the most recent share came to 2.42%. That’s one of the highest yields in its sector.

4. Pitney Bowes Inc. (NYSE: PBI) — The Meme-Ready Penny Stock

My fourth penny stock with a dividend pick is Pitney Bowes Inc. (NYSE: PBI).

Here is a stock I’m excited about. And it isn’t because PBI has a 5.36% dividend yield, distributed quarterly.

If you’ve gone back and studied what happened in the meme stock frenzy of 2021, PBI might be familiar to you…

PBI spiked about 100% in January 2021. But forget about that for a second. Let’s talk about a stock you’ll certainly remember — GameStop (NYSE: GME).

LOL HILARIOUSSSSSS $GME #wallstreetbets #gamestonk #RedditTrading #GameStop https://t.co/Ur610ME8a2

— Timothy Sykes (@timothysykes) January 29, 2021

GameStop was the sector leader of all of the meme stocks. And why am I telling you this?

Hestia Capital, the activist investor whose GameStop involvement directly led to the great run of 2021, has recently picked up a good chunk of PBI shares. And once again, they’re announcing that a stock they hold is undervalued.

If you were following back in 2019 when Hestia first became involved with GameStop, their involvement led to Ryan Cohen eventually taking over. Ryan Cohen was also behind this summer’s Bed Bath & Beyond Inc. (NASDAQ: BBBY) spike, and some are connecting the dots.

Cohen had planned to take on Amazon ever since founding Chewy Inc. (NYSE: CHWY), his pet food e-tailer. He poached Amazon talent for GameStop and talked about making it “the Amazon of gaming.” Some think his BBBY interest was part of a plan to expand his web of Amazon-like offerings. And there would be no better shipping arm than PBI.

PBI had a rough time in 2022, losing nearly half of its value. For the first time since the GameStop saga, Hestia is making noise. Could PBI finally be in the right place at the right time?

5. Lloyds Banking Group PLC (NYSE: LYG) — The British Banking Penny Stock

My fifth dividend-paying penny stock pick is Lloyds Banking Group PLC (NYSE: LYG).

When interest rates get higher, some banks profit. LYG looks to be one of those banks — one that will earn money off its assets, and not pass all of it along to savings customers. But dividend earners will get 4.78% on a semi-annual basis, which is more than double the sector average. European finance stocks did well in 2022, outperforming the S&P 500’s average after years of comparing poorly.

What’s more, analysts are predicting that it will rise for the next two years, maybe topping off at 6%.

Lloyds has no relationship with Lloyds of London, although it is one of the UK’s largest financial services organizations and the largest mortgage provider. Its market cap is $40 billion, in the top 20 on its home exchange, the London Stock Exchange. Incidentally, its home ticker traded in the £50s before the banking panic struck…

In other words, LYG isn’t your typical penny stock.

6. Mizuho Financial Group Inc. (NYSE: MFG) — The Japanese Banking Penny Stock

My sixth dividend penny stock pick is Mizuho Financial Group Inc. (NYSE: MFG).

This is another American depositary receipt stock for a foreign mega-bank. Mizuho ranks third among both Japanese financial service companies and banks, and is one of the 100 largest companies in the world. It was the largest bank in the world until 2005.

It’s also got an outsized dividend offering at 6.45%, delivered quarterly.

This isn’t the sketchy type of penny stock that I like to trade — you can think of it more as a fractional share in a “real” company. That’s good if you want some sense of stability, but not so good if you’re interested in the type of quick gains that the penny stocks I trade can deliver…

Trading is tough at first, especially in 2022, but I know of no other profession that can pay 6-7-8 figures within a few years of your mastery that doesn't require 6-figures & multiple years/1 decade invested in "higher education" & no office, connections or insincerity required

— Timothy Sykes (@timothysykes) November 29, 2022

MFG shares climbed by 11% over the past year. That’s a good return by most measures, but it won’t do much if you have a small account in the thousands.

That’s why I recommend studying the patterns that penny stocks often follow, and trading them with modest goals. 5-10% is a much more conservative goal than most traders target. But it also means I can capture the same returns in minutes that an investor in MFG would take 12 months to earn!

7. Nordic American Tanker Ltd. (NYSE: NAT) — The Oil Tanker Penny Stock

My seventh dividend penny stock pick is Nordic American Tanker Ltd. (NYSE: NAT).

The last three stocks on this list are all in the oil and gas sector. They also have some of the qualities I look for in a penny stock — like volatility.

2022 was good for oil and gas companies. NAT shares gained 80% over the year.

But volatility cuts both ways. Shares are down about 40% since their peak in May 2020. Dividends have also come down to 3.46%. Although this is high for the sector, it’s nearly 2 percentage points lower than NAT’s 4-year average.

Of course, this wasn’t one of the oil and gas stocks I traded in 2022…

REMEMBER TO FOCUS ON BIG % GAINERS ONLY! Sooooo many people are getting frustrated by boring as plays like $XELA $EEENF $ILUS $BBIG today and missing gimmies on $INDO $AMRR you gotta go where the action is. I sold $INDO too early, but still made roughly $1k because it's volatile!

— Timothy Sykes (@timothysykes) February 4, 2022

Indonesia Energy Corp. Ltd. (AMEX: INDO) went on a 1,700% run in March 2022. I took a cautious small percent gain that came out to $1,080 (starting stake $19,480) in the lead-up to this spree.

Imperial Petroleum Inc. (NASDAQ: IMPP) spiked by 1,900% the same month. I traded it for a 20% gain — $945 (starting stake $4,608) — when it spiked again two months later.

Best of all were my Houston American Energy Corporation (AMEX: HUSA) trades. HUSA gained 1,100% in March. My total gains came to $3,024 (click the link to see my individual trades).

NAT is capable of running 30, 40, 50%. It’s gone on runs like this several times in 2022 and 2023. That’s nothing to sneeze at.

But it’s a lot harder to carve out the 20% gain I took on IMPP out of moves like this.

8. Evolution Petroleum Corp. (AMEX: EPM) — The Texas Oil and Gas Penny Stock

My eighth penny stock with a dividend pick is Evolution Petroleum Corp. (AMEX: EPM).

EPM is an oil and gas stock that’s more than doubling the sector average for dividends, with a 7.36% yield (the sector average is 2.95%). Its chart is on a gentler slope than others in its sector, but it’s still gained 200% since crashing in 2020.

I don’t think it has the trading potential of HUSA or INDO, even though EPM has real profits. That separates it from HUSA and INDO, which are money losers.

So why does a stock like INDO spike 1,700% at a time when EPM is just chopping around?

It all comes down to the float size. EPM’s 30 million share float is almost 4 times the size of both INDO and HUSA’s float…

INDO and HUSA both have floats of around 8 million. We usually call a stock with a float under 10 million a low float stock.

While EPM was trading 400,000 shares in March 2020, INDO traded over 60 million. Combine those numbers with their respective floats and it becomes obvious that the supply side of INDO was put under pressure that EPM’s volume just couldn’t generate.

EPM is a nice stock that seems to be tied to a well-run business. Its stability is another double-edged sword — it cuts out the potential for bigger trades.

9. Alvopetro Energy Ltd. (OTCQX: ALVOF) — The Canadian Oil and Gas Penny Stock

My ninth dividend-paying penny stock pick is Alvopetro Energy Ltd. (OTCQX: ALVOF).

You’ve heard my arguments against trading these oil and gas dividend stocks…

You're welcome to ignore my lessons, rules, tips, strategies, trade big, short sell & blow up if you want, IDGAF LOL, but I'll just keep teaching my cowardly/safe strategies to those who want to learn. As my top students have learned: IT'S GOOD TO TRADE SAFE & SMALL GAINS ADD UP!

— Timothy Sykes (@timothysykes) February 24, 2021

I just think there are better plays to be made. But that doesn’t mean a stock like ALVOF should be ignored if it fits your goals and strategy.

Junky penny stocks like IMPP and INDO — that don’t produce real profits and will eventually implode on their foolish newbie investors — aren’t the only oil and gas penny stocks worth watching in this market. 

Companies like ALVOF, which seem to be focused on making money — not putting out press releases — have some things to recommend them.

First of all — look at that chart! No, I’m not talking about the 60% gains posted in 2022…

I’m talking about the 1,300% gains of the past FIVE YEARS.

The high prices around the natural gas ALVOF produces has only increased its profits. Who knows how much higher the stock price would be if it didn’t siphon off part of it into dividends?

But if you are attracted to dividend-paying stocks, you’ve got to love the 9.3% yield projected for the year ahead…

Although you might not love the fact that non-Canadian stockholders are subject to a withholding tax rate of 25%.

They’re also using their surplus cash on a stock buyback program. ALVOF seems to be making all the right moves.

Benefits of Dividend-Paying Penny Stocks

The clearest benefit of dividend-paying penny stocks is their “safety.” People prefer dividend-paying stock in a financial crisis because the payments hedge against volatility. In many cases, continued dividend growth also means they’re getting more money in the long-term through annual or quarterly payouts.

But this is an investing mindset, not a trading mindset. If you try it with penny stocks, odds are you will get burned.

I like to trade conservatively and stay in cash in choppy markets like this. While I can see the appeal of cheap dividend stocks, they’re not for me. That’s especially true in the penny stock market, where you’re more likely to see companies collapse than dividends increase.

At the end of the day, people have their trading preferences. What works for me might not work for you, and vice versa. If you know all the facts about cheap dividend stocks and still want to buy them, I won’t stop you.

All I want is that you find your best game plan and stick to it. I think buying penny stocks and hoping for monthly dividend payouts to increase your passive income is a flawed strategy — you better have a really good reason for choosing to do it anyway.

And, as always, have an exit plan and know when to cut your losses.

The Highest Dividend-Paying Penny Stocks

For me, it doesn’t really matter what the highest-paying dividend stocks are. That isn’t what this watchlist is about either. If you’ve read any of my other articles, you know that I don’t make stock picks for people to blindly copy. That’s usually a recipe for failure.

You need to hold stocks for months or even years to benefit from dividend yields — which isn’t my style. I don’t care about the cheap stocks I’m trading because, at the end of the day, they’re just how I make money. If you want to be a smart trader, you shouldn’t either.

Penny stocks aren’t like your favorite football team — if the company fails, you can lose a lot of money. Unfortunately, that’s how penny stock companies trap people.

These companies lure income investors and traders in by offering cheap stock with promises of rising share prices and dividend income, lulling them into a false sense of optimism. When the stock price falls, these gullible newbies usually keep holding. They don’t have a trade plan, and don’t know they should cut losses quickly.

How to Find Penny Stocks That Pay Dividends

If you’re still looking for penny stocks that pay dividends — or anything else — you’ll need a capable stock screener like StocksToTrade. I helped develop and found StocksToTrade, so of course it’s going to fit the way I trade.

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Choosing The Right Penny Stocks for Your Trading Strategy

Different strokes for different folks, different strategies for different traders. There’s no “ultimate penny stock watchlist” because every trader has their own strategy. You shouldn’t blindly copy stock picks, whether from me or other sources like Reddit or social media. You should have a game plan and choose stocks that fit your trading preferences.

All traders can benefit from journaling their trades. A detailed trading journal shows your entry and exit points, how much you won or lost, and what technical indicators or catalysts made you enter the trade. It should also record your emotions when you enter and exit a trade.

By keeping a record of every transaction, you’ll learn from experience and avoid making the same mistakes repeatedly. Mistakes are essential to learning, but making the same ones over and over again just shows that you still need to learn.

Where to Trade Penny Stocks

You can trade penny stocks on stock broker platforms and websites. However, not all of them offer the same choices of stocks. Different brokers treat penny stocks differently — some offer both listed and over-the-counter (OTC) stocks, some only offer listed stocks on big exchanges like Nasdaq, and others give you a very limited selection of penny stocks.

A stock broker platform is essential to your trading journey, so ensure you pick the right one before proceeding. Try different brokers and get a good feel for their features, what you like and don’t like.

Once you have a good broker (or brokers!), it’s time to find a great trading community. Find one that constantly pushes you to be a better trader and shares insights on all things trading — just like my Trading Challenge crew!

Penny Stocks That Pay Dividends FAQs

1. Which penny stocks will grow in 2023?

There’s little use in predicting which penny stocks will grow in 2023. Predicting which stocks will rise locks you in… which makes it harder to adjust if your prediction is wrong.

React to what the market is telling you, don’t predict. Watch the market for indicators and catalysts, then get into a trade when you spot the right opportunity. By reacting, you have more flexibility and can adjust your strategy on the fly.

2. Are dividend-paying penny stocks worth buying?

All penny stocks are worth buying if they fit your strategy. Let me tell you why they don’t fit mine — I never invest in penny stocks, I only trade them.

To collect penny stock dividends, you have to hold them through their payout date. I call that strategy “hold and hope.” In trading, hope isn’t a winning strategy.

3. How do you know when to sell penny stocks?

You’ll know when to sell penny stocks if you have clear goals and risks built into your trading plan. When your stocks reach the price target or fall below your risk threshold, that’s when you sell.