Penny stocks can, in some ways, be considered as ‘Marmite’ investments. What I mean by this is that share investors tend to love them or hate them — like the savoury popular food spread.
Penny stocks are shares of usually small-cap companies that cost less than £1 per share. Their cheapness means that they can be prone to bouts of extreme share price volatility. They tend to be financially weaker than larger-cap companies, too, making them vulnerable when times get tough.
These weaknesses and their relative unpopularity means that many of them are massively undervalued. This gives me an opportunity to nip in and grab a potential growth hero of the future at a knock-down price.
Here are two cheap dividend-paying penny stocks I’d buy right now. I think they could make me a lot of cash over the next decade.
A platinum-plated stock
I think the stage could be set for platinum prices to soar. And so I’m considering buying South African mining company Sylvania Platinum (LSE: SLP) for my portfolio.
There are several reasons why precious metals prices could surge. Rocketing inflation and a stuttering global economy. Rounds of fresh trade wars. A fresh Covid-19 crisis in China, and severe geopolitical repercussions from the war in Ukraine.
Platinum prices in particular could receive an extra boost from tightening supplies, helping Sylvania Platinum’s profits even further. This week the World Platinum Investment Council slashed its platinum surplus forecasts for 2022. It now expects the surplus to fall to 627,000 ounces from 1.12m ounces last year.
5.7% dividend yields!
A rising US dollar threatens to derail potential gains for precious metals prices. But on balance I think the possible benefits of owning Sylvania Platinum shares remain compelling. I expect demand for platinum group metals (PGMs) to soar as stricter emissions regulations demand higher amounts of the precious commodities be loaded into autocatalysts.
Besides, at current prices the mining stock trades on a forward price-to-earnings (P/E) ratio of just 3.8 times. This represents some seriously-good value. It carries an enormous 5.7% dividend yield too.
Going for gold
In the current environment, getting exposure to the most popular precious metal of all is a good idea. Therefore Egypt-focussed gold miner Centamin (LSE: CEY) is also on my shopping list today.
Like Sylvania Platinum, Centamin offers exceptional all-round value right now. Its dividend yield for 2022 sits at a mammoth 5.6%. Furthermore, the gold stock trades on a sub-one price-to-earnings growth (PEG) ratio of 0.8 for this year.
Centamin’s low share price reflects to some degree the risky nature of its operations. It’s a quality the business shares with Sylvania, of course. Setbacks with mineral exploration, mine development, and metal production can be common. And they can have a catastrophic impact on future profits.
However, this is a risk I’d be happy to take given the bright outlook for precious metal prices. I think Centamin and Sylvania are top penny stocks to buy today.