Picture supply: Getty Pictures
Snapping up a number of dividend-paying penny shares is a fast and straightforward option to work in direction of constructing a second revenue stream. Not solely is an inexpensive worth useful, it provides an additional layer of flexibility to an funding.
It is because the payouts that dividend firms reward to shareholders might be withdrawn as money or reinvested to develop the portfolio.
Sadly, most inexpensive shares don’t pay dividends as a result of the corporate’s extra centered on reinvesting into the enterprise. So after I seen this tiny information and media firm provided a 12% yield, I needed to take a more in-depth look.
Price range-friendly… with threat
With a £186m market-cap and shares buying and selling at simply 58p every, Attain (LSE: RCH) may be very a lot in small-cap territory. Since 2021, it’s been paying a full-year dividend of 7p per share, making the present yield a powerful 12% (certainly, third-party knowledge places the yield round 12.4%).
Fifty thousand of the 58p shares would price round £29,000, paying dividends value £3,480 a yr. Okay, that’s no small one-off funding however it may very well be constructed over time. For instance, by contributing simply £200 a month and reinvesting the dividends, it will take lower than seven years.
However with each the share worth and market-cap down about 34% this yr, might or not it’s a price lure slightly than a cut price?
Dangers to think about
The print media trade has had a tricky time recently, and Attain hasn’t escaped the ache. With digital media and internet marketing cornering the market, conventional revenues have suffered.
Within the third quarter of 2025, the corporate reported complete income down round 2.5% year-on-year, with print income falling by virtually 4% and print promoting dropping roughly 13%. In the meantime, digital income edged up simply over 2%.
The falling worth may very well be engaging to worth hunters, with a price-to-earnings (P/E) ratio of three.68 and price-to-sales (P/S) ratio of 0.36. However these metrics alone imply little or no. With out some concrete indications of a turnaround within the close to future, there’s a threat the value might hold falling.
Wanting forward
Layoffs have already begun as a part of a £20m restructuring aimed toward attaining 4%-5% price financial savings. Nevertheless, the corporate has stated it stays assured of assembly full-year market expectations regardless of softer promoting situations.
Whereas digital progress’s taking place, it’s nonetheless a battle to exchange legacy revenues. Administration’s acknowledged that the transition stays difficult, and analysts have warned that free money move protection of the dividend might tighten if promoting revenues weaken additional.
On the flip facet, an investor who’s comfy with threat would possibly contemplate this as a way to doubtlessly construct a second revenue stream. If the dividend stays intact and the share worth stabilises, then the £3,480 annual revenue may very well be significant. However that’s removed from assured.
The underside line
Briefly, this inventory affords a tempting yield for anybody seeking to construct a second revenue. However excessive yield typically displays excessive threat. An investor ought to weigh up the possibility of dividend cuts, the structural challenges dealing with the media trade and the corporate’s potential to navigate the digital shift.
If administration delivers on its price financial savings and income objectives, the beneficiant dividend would possibly proceed. If not, that double-digit yield might vanish simply as rapidly. Both manner, it’s one to think about, albeit with a cautious strategy.
