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Snapping up a couple of dividend-paying penny shares is a fast and simple solution 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It is because the payouts that dividend firms reward to shareholders may be withdrawn as money or reinvested to develop the portfolio.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 targeted on reinvesting into the enterprise. So once I seen this tiny information and media firm provided a 12% yield, I needed to take a better look.
Finances-friendly… with danger
With a £186m market-cap and shares buying and selling at simply 58p every, Attain (LSE: RCH) could 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 knowledge places the yield round 12.4%).
Fifty thousand of the 58p shares would price round £29,000, paying dividends price £3,480 a yr. Okay, that’s no small one-off funding however 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 yr, may or not it’s a price lure quite than a discount?
Dangers to think about
The print media business 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 could possibly 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 danger the worth may preserve falling.
Trying forward
Layoffs have already begun as a part of a £20m restructuring aimed toward attaining 4%-5% price financial savings. Nevertheless, the corporate has mentioned it stays assured of assembly full-year market expectations regardless of softer promoting situations.
Whereas digital development’s occurring, it’s nonetheless a battle to switch legacy revenues. Administration’s acknowledged that the transition stays difficult, and analysts have warned that free money circulate protection of the dividend may tighten if promoting revenues weaken additional.
On the flip aspect, an investor who’s comfy with danger would possibly contemplate this as a method to probably 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 gives a tempting yield for anybody seeking to construct a second revenue. However excessive yield typically displays excessive danger. An investor ought to weigh up the possibility of dividend cuts, the structural challenges going through the media business and the corporate’s means to navigate the digital shift.
If administration delivers on its price financial savings and income targets, the beneficiant dividend would possibly proceed. If not, that double-digit yield may vanish simply as rapidly. Both method, it’s one to think about, albeit with a cautious strategy.
