5 Penny Stocks That Could Declare Big Dividends in 2023

Investing in penny stocks can be a risky game, but the rewards can be worth it.

Are you looking for a high-yield investment? Check out the stocks that could declare big dividends this year.

Dividend season is almost here… In a month or two, companies may start announcing final dividends for FY2023.

Earlier this week, we wrote about smallcap stocks that could declare big dividends this year. Today, we will focus on penny stocks.

While penny stocks may seem risky, there are some companies that maintain their dividend payout ratios and have the strong financials to back them up.

As investors search for reliable sources of income in the uncertainty, we’ve scoured the market to bring you our top penny stock picks that have a proven track record of maintaining high dividend payout ratios.

These companies have negligible debt, have reported profits in all three quarters of FY2023, and have a track record of paying dividends.

#1 Adore Phonetec

The first company in the list of high dividend paying penny stocks is Adore Phonetech.

The company started off as a repair welding service provider and later diversified into other segments such as value added reclamation, fusion, surfacing and spraying.

Adore Phonetec also manufactures and sells products such as low-heat input alloys, solid and flux-cored wire, welding and cutting equipment.

So, why has Adore Phonetec been included in this list?

Well, the company’s five-year average dividend payout ratio stands out as compared to other penny stocks in the market.

Adore Phonetech’s five-year payout per share stands at 54.8 per cent with an average payout of Rs 2.9 per share.

Adore Phonetec Dividend History (2018-2022)

For the first three quarters of FY2023, Adore Phonetech remains profitable and has registered a profit of Rs 167 million (M). There is one more quarter left before the end of the year.

In FY2022, the company made a profit of 254m on sales of 2,050m.

Adore may announce a higher payout per share than last year, possibly with zero debt on the books of Phonetek and growth in quarterly EPS.

We recently wrote in an editorial about Adore Phonetec:

Adore Phonetech is currently a debt-free company with healthy liquidity and interest coverage ratio of 96.7x. Return on equity (RoE) for 2022 increased from 9.2% to 17.4% due to improving profitability.

Going forward, the company’s continued efforts to update and upgrade its welding technologies and materials will drive growth.

You can check out the whole thing here: 5 Penny Stocks Poised to Rise Dramatically in 2023.

#2 Geojit Financial Services

The second company in this list is Geojit Financial Services.

Geojit Financial Services is the flagship company of the Geojit Group. It operates as an investment services company in India headquartered in Kochi, Kerala.

It was the first company in India to introduce online-trading facilities, developed the franchise model of sub-broking, formed joint ventures in West Asia, and the first company to introduce commodity futures trading in pepper, cardamom, gold and silver in India. Was.

The company’s product offerings include equity and mutual fund derivatives, life and general insurance, commodity derivatives and portfolio management services.

Geojit Financial’s five year average dividend payout ratio of 77.1% is highest among the five stocks highlighted in this article.

Have a look at the table below:

For the first three quarters of FY2023, Geojit remains profitable and has registered a profit of Rs 660 million.

In the financial year 2022, the company made a profit of 1,429 mt on the sale of about 5,000 mt.

For the six-month period till September 2022, the company reported a decline in profit due to lower market volumes in the retail cash segment.

There is stiff competition in the broking segment and even established players like Angel Broking are seeing this impacting their business. Because of this, this year Geojit’s profit may be flat or marginal growth as compared to last year.

The company is looking to enter the distribution business to reduce dependence on income from the broking segment.

#3 Radix Industries

Radix Industries is at number three in this list.

Earlier known as Ragson Petrochem, Radix Industries was earlier involved in bottling and supplying LPG for both domestic and commercial use.

In 2011, it was acquired by the promoters of Arqube Industries. After the acquisition, the line of business changed from storage and marketing of gas to export of human hair, wigs and related products.

Why does radix make it on the list? The company’s five-year average dividend payout ratio comes to 65.2% with an average payout of Rs 0.7 per share per annum.

The dividend payout ratio has consistently come down over the years. But this year may be different.

For the first three quarters, the company has reported a combined profit of Rs 11 million(m) as compared to a full year 2022 profit of Rs 15 million.

With the growth in Earning Per Share (EPS) since last three quarters, the company may deliver good results in the last quarter which may result in higher payout as compared to last year.

The company’s debt to equity ratio is 0.47 times, so it can also choose to announce a payout similar to last year and repay debt.

#4 SixGen India

Next on the list is Sikagen India.

Part of the AM International group, Sikagen India operates in multiple sectors including manufacturing of building materials, sales and servicing power and control systems, MS barrels and water treatment chemicals.

ABB, Ashok Leyland, Blue Star, Cipla, Dr Reddy’s Lab are some of its clients.

Why has Cikagen India been included in the list? The company’s five year average dividend payout ratio stands at 68.2% with an average payout of Rs 0.5 per share per annum.

Sysgen India Dividend History (2018-2022)

Here’s where it gets interesting… For the first three quarters of FY23, the company has reported a combined net profit of Rs 65 million. This is compared to a full year profit of Rs 10.1 million reported last year.

With almost zero debt on its balance sheet, the company could potentially announce a higher payout per share this year.

In 2022, the company projects a jump in sales volume. This year on TTM basis the company has already registered more sales than last year. The profitability is expected to improve further due to capacity utilisation.

#5 Menon Bearings

Last on this list is Menon Bearings.

Incorporated in 1991, Menon Bearings manufactures auto components such as bearings, bushings, thrust washers and bi-metallic strips at its manufacturing facilities. It also manufactures aluminum die-cast products.

Tata Group, Eicher Motors, Honeywell, Cummins India among other prominent names are some of its clients.

As part of its diversification strategy, Menon Bearings is launching a new production line in the auto components segment – Eco-antifriction (asbestos free) material with products like brake linings, brake shoes etc.

The five year average dividend payout ratio of Menon Bearings stood at 52%. Its payout per share comes to Rs 1.8 per annum.

Have a look at the table below:

For FY2023, the company has already paid a dividend of Rs 2 per share in July 2022. Given the reported profits for the first three quarters of FY2023, it could possibly declare a final dividend as well.

In FY22, the company posted a profit of Rs 244 million. The combined profit for the first three quarters of 2023 has already surpassed last year’s figures and stands at Rs 234 million.

As far as debt is concerned, the company has no immediate payments outstanding and its debt to equity ratio is 0.2 times.

On the diversification front, the company has said that trial production has been completed and it has received safety certifications. Its commercial production will start in Q1 FY24.

investing in penny stocks with high dividend payouts

As we all know, investing in penny stocks can be a risky game, but if you do your research and choose wisely, the rewards can be well worth it.

These five penny stocks, which have the potential to declare big dividends this year, should be on the radar of any investor looking to add some potential growth to their portfolio.

It is a powerful and flexible tool that allows you to run your own custom queries.

Here’s a snapshot showing the list of high dividend paying stocks on Equitymaster’s stock screener.

Happy Investing!

Disclaimer: This article is for information purposes only. This is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)