Why might investors steer clear of this one? Well, interest rates are still high. And global trade friction could push inflation and keep rates up for longer. And that all puts pressure on building demand.

But against that, forecasts that put the price-to-earnings (P/E) ratio down around 10 by 2027 make it look undervalued to me. Net cash rather than net debt strengthens that feeling. And a forecast 4.4% dividend yield puts a cherry on top.

Even with the sector risk, it has to be a consideration for long-term value investors.

Investment Trust

CT UK High Income (LSE: CHI) investment trust is another favourite that’s just above the usual penny share limits. But it’s not too far out with a £119m market-cap. And a share price rise of around 35% in the past five years has pushed it to only a few pennies over a pound.

What does it have that I like? It has Shell, AstraZeneca, NatWest, Legal & General, Imperial Brands… that’s what. They’re all in its top 10 holdings, together with some other FTSE 100 dividend big-hitters.

They contribute to an expected dividend yield of 5.4%. And dividends are paid quarterly, which could make it a more attractive proposition for investors wanting steady income.

Being such a small-cap trust it must be at greater risk of investors pulling out during downturns and sending the price down. And going for something like the much bigger City of London Investment Trust might be a safer alternative. But the diversification should help offset the risk. And I do like that dividend.

Jam tomorrow

Am I pushing things a bit with a share price up around 130p? That’s where specialist medical diagnosis firm Diaceutics (LSE: DXRX) is, and its market-cap’s just about £112m. But that’s due to a 50% rise since early 2024, so it’s close to being a penny stock time-wise. And forecasts mean I really can’t ignore it.

The company’s loss-making right now after a decline following the Covid days. But forecasts suggest profit in the 2025 fiscal year, with a rise in 2026 giving a P/E of under 18.

It’s also in a niche market. And we never know when a big pharma company might muscle in on its business.

But analysts are bullish on the stock with a strong Buy consensus. And their price targets range from 180p to 225p. Even the lower end is around 35% above the current price.

It’s a tiny, high-risk, currently unprofitable, jam-tomorrow growth stock. But the jam might actually not be very far way.

The post 3 cheap near-penny stocks to consider buying right now appeared first on The Motley Fool UK.

Typically, in the UK we think of a penny stock as one with a share price of less than a pound, and a market cap of under £100m.

And that’s exactly what the two I’m looking at today were like when I last examined them in late 2023. Since then, they’ve both risen. And one has crept up to a bit over £100m. But not by a lot.

Nearly penny share

My, erm, nearly penny share is the CT UK High Income (LSE: CHI) investment trust. After recent gains, the market cap almost squeezes in at £106m. And the share price only just qualifies, at 95p.

But I think there could be more to come, and I reckon 95p is still too cheap.

Among the trust’s top 10 holdings, Shell is at number one. There’s long-term risk with oil, but when I see a price-to-earnings (P/E) ratio of only around eight, my eyes sparkle.

Billionaire investor Warren Buffett is still big on oil, and he usually knows good value when he sees it.

Big dividends

Phoenix Group Holdings is in there, with its stunning 10.9% forecast dividend yield.

There’s NatWest Group too. And that’s possibly my favourite FTSE 100 bank right now, with a 5.5% yield.

As well as holding some of my top Footsie picks, the trust’s shares can be bought at a discount of 2.3%. It was 6% not long ago, which suggests investors are getting back in.

A small trust like this shares the risks of the stocks it holds. And those risks tend to be magnified as investment trust shares can fall to a big discount if those holdings fall.

But on the other hand, we get diversification thrown in.

Mining growth

Anglo Asian Mining (LSE: AAZ) has a £72m market cap and a 64p share price at the time of writing.

Again, it’s one I’ve been watching since late last year. And, after a long share price slide, it’s finally been picking up a bit.

FY 23 results were a bit disappointing, as revenue for the year fell to $45.9m, from $84.7m. Anglo Asian produces gold, copper and silver, and the lower revenue was due to lower production.

The firm posted a $32m loss before tax, following a 2022 profit of $7.5m. The balance sheet fell to a net debt of $10.3m at 31 December.

Look ahead

The reason I’m optimistic? Some key resources should come on-line in the current year, with the Gilar mine looking like a major asset. First ore is expected by the end of 2024. And the firm has doubled the capacity of a flotation processing plant “in anticipation of processing richer ores from Gilar.“

With a lot of miners at this stage of development, there’s very much a ‘jam tomorrow’ aspect. And I wonder if new cash might be needed before any return to profit.

But Anglo Asian has been generally profitable, which boosts my confidence.

The post 2 penny shares to consider buying while their prices are still cheap appeared first on The Motley Fool UK.

They can bring a lot more risk. But if we choose carefully, I reckon we can find ones that can break through the pound barrier — and maybe go a lot further.

Asset management

My first choice is easily the best name of today’s chosen three. It’s Frenkel Topping Group (LSE: FEN), and it doesn’t make things for pizza or cakes.

No, Frenkel Topping is an independent financial adviser and wealth manager. And its share price has had a bad couple of years. But it’s up 65% in five years.

That’s a good overall performance, considering the way so many investment-related stocks have been under the hammer in recent years.

Broker forecasts look good, with earnings growth on the cards. If they’re right, we’d see the stock’s price-to-earnings (P/E) ratio dropping to about 10 by 2025.

There’s a modest dividend too, with a yield approaching 3%. That’s not the biggest, but it looks like it’s growing.

I think the big risk is that high interest rates could drive investors away from the firm’s services.

But I could see decent long-term growth here.

Bricks

My second pick is something simpler, Michelmersh Brick Holdings (LSE: MBH). It makes bricks, as the name suggests, and tiles and things like that.

The share price has had a surprisingly rocky five years, up 7%. But since the house building market started to decline, it’s fallen.

We had a trading update on 23 November, which speaks of a resilient performance, so far.

Solid earnings forecast for the next couple of years would give us a P/E of 8.7, dropping to 8.3 by 2025. And there’s a dividend yield of more than 5%.

The dividend was cut in the pandemic, but it’s already back above pre-2019 levels.

An extended period of high mortgage rates could keep the pressure on the construction business. And that would surely have a knock-on effect on demand for Michelmersh’s products.

But for those with a positive view of housebuilding for the long term, I think this could be a great choice right now.

Investment trust

I like CT UK High Income Trust (LSE: CHI), for diversification. The share price is down 12% in five years, as funds available for investing have taken a hit since inflation and interest rates started to soar.

The trust invests mostly in UK stocks and doesn’t have a wide range of holdings. It couldn’t really, with a market-cap of just £90m.

But it does hold stocks like Shell, British American Tobacco, AstraZeneca and Vistry Group. I rate those all as good value.

It faces the same risks as those individual stocks. And perhaps more so, as I suspect investors are more likely to go for bigger investment trusts when things look brighter.

But we’re looking at a dividend yield of 6.8% here. And the shares are on a discount of 6% to net asset value.

The post 3 penny stocks I think could smash through £1 appeared first on The Motley Fool UK.

Banking on receiving cash

The first business is Close Brothers Group (LSE:CBG). The UK bank sits in the FTSE 250 and doesn’t quite get the same limelight as its FTSE 100 banking peers. Admittedly, it’s a smaller overall outfit, but it follows the same business model as other banks.

One reason why I’m favouring Close Brothers for my dividend portfolio over other banks is the generous dividend yield. It currently sits at 6.72%, putting it in the top percentile of income stocks in the index.

Ahead of half-year results released next month, I feel there’s plenty to be positive about. A trading update late last year spoke of growth in the asset management arm. Year-to-date net inflows were up 7% versus last year, even in a difficult environment. It has also mentioned that the “year-to-date net interest margin remained strong”. This refers to the difference between the money it makes from lending cash versus what it pays on deposits.

I do note that one reason for the high yield is due to the share price falling 18% over the past year. A contributing factor to this was a fall in profit in the full-year results, with the trading division (Winterflood) having a slower year. This is a risk going forward.

Income from a trust

The second company is the CT UK High Income Trust (LSE:CHI). The investment trust has a dividend yield of 6.39%. Over the past year, the share price is broadly flat.

Even though I like to pick specific stocks, I’m also happy to take on a trust that essentially holds a multitude of different shares. This is especially true when I’m trying to beat a Cash ISA return this year. I expect dividends to be cut for some companies due to a rocky 2023 trading period. At the moment, I can’t say for sure which sectors will be most impacted.

That’s why I’m happy to give my money to the professionals. They have the ability to research in much more detail than I can. They’re also experienced in building a portfolio. In short, I might just buy this one stock, but I’ve diversified my risk as this trust owns many shares. Each of these has the goal of generating income.

A risk is that 71% of the trust is invested in UK stocks. This does leave me exposed if the UK economy underperforms the rest of the world this year.

I feel both stocks allow me to achieve a higher return than a Cash ISA, without taking on excessive risk. When I get paid in March, I’ll look to buy both.

The post Forget a Cash ISA! Here are 2 dividend shares I’d buy in March instead appeared first on The Motley Fool UK.