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Snapping up a number of dividend-paying penny shares is a fast and simple strategy to work in the direction of constructing a second revenue stream. Not solely is an affordable worth useful, it provides an additional layer of flexibility to an funding.
It’s because the payouts that dividend firms reward to shareholders could be withdrawn as money or reinvested to develop the portfolio.
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 formidable 12% (certainly, third-party information places the yield round 12.4%).
Fifty thousand of the 58p shares would price round £29,000, paying dividends price £3,480 a 12 months. Okay, that’s no small one-off funding nevertheless it could possibly be constructed over time. For instance, by contributing simply £200 a month and reinvesting the dividends, it might take lower than seven years.
However with each the share worth and market-cap down about 34% this 12 months, may or not it’s a worth entice somewhat than a cut price?
Dangers to think about
The print media business has had a tricky time these days, and Attain hasn’t escaped the ache. With digital media and internet advertising cornering the market, conventional revenues have suffered.
Within the third quarter of 2025, the corporate reported whole 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 could possibly be enticing 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 worth may hold falling.
Wanting forward
Layoffs have already begun as a part of a £20m restructuring geared toward reaching 4%-5% price financial savings. Nonetheless, the corporate has mentioned it stays assured of assembly full-year market expectations regardless of softer promoting situations.
Whereas digital progress’s occurring, it’s nonetheless a battle to interchange legacy revenues. Administration’s acknowledged that the transition stays difficult, and analysts have warned that free money circulation protection of the dividend may tighten if promoting revenues weaken additional.
On the flip facet, an investor who’s comfy with threat would possibly think about 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 could possibly be significant. However that’s removed from assured.
The underside line
In brief, 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 going through the media business and the corporate’s capability 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 may vanish simply as rapidly. Both manner, it’s one to think about, albeit with a cautious method.
