I think these two penny stocks could help turbocharge my investment wealth. Each offers a dividend yield north of 5%.
Raising the roof
A colossal shortage of new homes is sending property prices through the roof (no pun intended!). This isn’t just a British phenomenon either. It’s why I’m considering buying housebuilder Cairn Homes (LSE: CRN).
Irish property prices are rising faster than they are in the UK due to a supply crunch. Latest government data showed the average home price in Ireland rocket 15.3% year-on-year in February. This was also the biggest jump for seven years.
A steady stream of positive market updates from Dublin-based Cairn Homes echo these supreme trading conditions. In March, the penny stock said that revenues leapt 62% year-on-year in 2021, to €424m, while gross margins leapt 350 basis points to 19.8%.
Cairn’s pre-tax profit soared 240% from 2021 levels as a result to €50.2m. And the business is seeking to supercharge build rates to between 5,000 and 5,500 homes by 2024 to capitalise on the fertile trading environment. The firm sold 1,120 homes last year.
A mega-cheap penny stock
I believe the future is extremely bright for Cairn Homes. Yet I don’t believe this is reflected in the company’s current valuation. At 93p per share, the builder trades on a price-to-earnings (P/E) ratio of just 8.5 times for 2022. This is a valuation that reflects the possible impact rising interest rates will have on Cairn’s sales, in my opinion.
One final thing: Cairn Homes carries a large 5.4% dividend yield at today’s prices too.
Good as gold!
News of rampant inflation continues to rattle investor nerves. The stock market sell-offs of recent days illustrate the scale of investor concerns right now. However this is an environment that I think plays into the hands of gold stocks like Centamin (LSE: CEY).
During periods of high inflation, gold prices tend to rise as the true value of paper currencies comes into question. And the current landscape is particularly promising for gold mining stocks too as elevated inflation accompanies low growth (also known as stagflation).
Latest gold investment data from the World Gold Council reveals how strong interest in safe-haven bullion remains. It says that global gold exchange-traded funds (ETFs) enjoyed inflows of 43 tonnes in April. This was the fourth successive month of inflows.
5.2% dividend yields
Buying Centamin shares is more risky than investing in physical gold itself. This is because profits-sapping operational problems can be a common problem for mining stocks.
Still, this is a risk I’d be prepared to take to get hold of Centamin’s big dividend yield. This sits at a mammoth 5.2% for 2022.
At 90.8p per share, Centamin also trades on an undemanding forward P/E ratio of 11.9 times. I think the gold stock’s excellent all-round value makes it, like Cairn Homes, a top penny stock to buy today.
