Buying penny stocks gives me an opportunity to own the growth heroes of tomorrow. As someone who invests with a long-term view, I’m happy to endure the temporary share price volatility that low-cost stocks like these often experience.
With some decent research I think I have a good chance of making terrific returns in the years ahead. Here are three top ‘nearly’ penny stocks I’m considering buying right now. As well as offering plenty of growth potential they also boast huge dividend yields north of 5%.
Greencoat UK Wind
Scores of UK shares face some significant damage to profits as the costs of Storm Eunice rack up. But other companies like Greencoat UK Wind stand to gain as record winds supercharged energy generation from wind turbines. On Friday morning, wind energy accounted for a whopping 42% of all electricity generation in Britain.
I’ve long argued that Greencoat, which owns dozens of onshore and offshore wind farms across England, Scotland, Wales and Northern Ireland, is a great dividend share to own. The wind farm owner will have a huge role to play in the transition to low-carbon electricity sources.
I’d buy it even though the threat of regulatory action to curb shareholder returns is a constant risk. Today, Greencoat sports a 5.4% dividend yield.
Bakkavor Group
It’s my opinion that food producer Bakkavor Group offers terrific all-round value. As well as carrying a 5.9% dividend yield, this ‘nearly’ penny stock also trades on a price-to-earnings (P/E) ratio of 10.8 times. These readings make it a top buy despite the threat that fresh profits-smacking lockdowns could cause if coronavirus infections soar again.
Bakkavor operates in the ‘food to go’ segment and watched revenues sink in 2020 as people stayed at home. Receding Covid-19 cases more recently however, suggest to me that the business could have turned the corner.
The ‘food on the move’ sector is tipped to grow strongly — in the UK it’ll be worth £22.6bn by 2024, according to Lumina Intelligence, up £7bn-plus from 2021’s anticipated levels. And Bakkavor should be well-placed to exploit this opportunity.
Impact Healthcare REIT
Cheap UK stock Impact Healthcare REIT looks set to benefit massively from Britain’s ageing population. The company operates 100-plus care homes in the UK and is rapidly expanding its estate to provide more space for elderly residents.
It’s currently in advanced discussions to acquire almost £70m worth of assets to keep its portfolio growing too, and has a medium-to-long-term pipeline above £290m.
I am concerned by the threat that changing social care policy could pose to Impact Healthcare REIT. Rising salaries for nurses also poses a danger as it threatens the profitability of the company’s tenants. But these are risks I’d be willing to accept given the company’s cheap share price.
Today, it trades on a forward P/E ratio of just 9.8 times. This, combined with the property giant’s 5.9% dividend yield, makes it a top value buy, in my opinion.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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