Buying penny stocks exposes investor portfolios to a greater chance of volatility. After all, these tiny enterprises are notoriously risky. But the potential rewards they offer can sometimes make that risk worthwhile.
That might be the case for Centaur Media (LSE:CAU), with a price that has almost doubled since the start of 2025!
What’s more, in a surprising twist, the penny stock also offers a pretty robust 4.1% dividend yield despite its small size. And at today’s share price, buying 55,555 shares would unlock a £1,000 passive income.
So, can this share price momentum continue into 2026? And if so, should investors rush to buy while the yield is still ahead of the stock market’s 3.1% average?
Explosive growth
As a quick crash course, Centaur Media provides business intelligence, learning, and consultancy services to help with marketing. But rather than being driven by strong operational performance, the recent surge in its share price actually stems from asset sales.
Following a strategic review at the end of 2024, management has been refocusing its operations on its core marketing-focused services. And the firm subsequently sold off:
- MiniMBA in July 2025 for an enterprise value of £19m.
- MWCR Limited in September for £3.9m.
- Thelawyer.com in October 2025 for £43m.
The combined impact of all this has pushed the group’s net cash position to £71m. And subsequently, the share price has surged to match this sudden inflow of capital.
What now?
Executing lots of disposals creates some accounting complexities. But when pulling back the curtain, the performance of its remaining brands is a bit mixed. Combined, they generated £5.9m in revenue across the first six months of 2025, down from around £7.2m during the same period in 2024. And earnings were also in the red.
However, with the balance sheet now flooded with cash, the company has a lot of financial resources at hand to start righting the ship.
Management has already highlighted maximising operational efficiency as a top priority, along with cost-cutting efforts to streamline operations and bolster margins. And it seems to be fairly confident in its new strategy, given that dividends have been maintained despite reporting losses.
Time to buy?
Following all these asset sales, Centaur Media has become a far more stripped-down operation. While that certainly makes it easier for leadership to focus its efforts, it also significantly reduces the margin of error.
Bad execution or soft market conditions could wreak havoc on its financials and ultimately put an end to its currently robust yield. And with no detailed overarching turnaround plan outlined beyond cutting spending, the outlook for this business is far from transparent.
In other words, there’s a lot of uncertainty surrounding this penny stock right now. So, even with the prospect of lucrative passive income, this isn’t a business I’m rushing to invest in. Instead, I’m looking elsewhere for income-earning opportunities.
