Right now I’m looking for top-quality UK shares to add to my Stocks and Shares ISA. Here are four great penny stocks I’d happily invest in today.
#1: Safe as houses
A lot of people don’t like to buy penny stocks. This is because their low liquidity can result in severe price volatility. Personally speaking, I don’t think that Residential Secure Income is a terrifying pick for long-term investors like me. That’s not just because over a period of years quality shares should overcome any short-to-medium choppiness and rise strongly in price. It’s because this penny stock invests in shared ownership and rented residential properties, one of the most defensive property segments out there. I like this British stock even though its acquisition-led growth strategy could throw up unexpected problems later down the line.
#2: A dirt-cheap penny stock
Costain Group is another UK share that packs plenty of punch on the dividend front. The engineering services provider sports a mighty 5.5% dividend yield for 2021. But this isn’t the only reason this particular penny stock has caught my attention. The UK share trades on a forward price-to-earnings (P/E) ratio of around 8 times. Okay, Costain suffered an eye-watering loss last year, and another one could be coming down the pipe if the coronavirus crisis explodes again. But I think these risks could be baked into the price. Indeed, I think Costain could deliver strong profits growth over the next decade as infrastructure spending in Britain detonates.
#3: Make monster gains down in Africa
Airtel Africa’s dividend yields might not be as electrifying as those of Costain Group. But the company’s forward yield still sits at a meaty 3.8%. It’s a reading that beats the 3.5% corresponding average for UK shares by a decent margin. I’d back this penny stock to deliver meaty profits and thus dividend growth throughout this new decade, too, as telecoms demand in its emerging markets balloons. The company is seeking to raise the annual dividend “by a mid to high single digit percentage” from now on. Though bear in mind that high net debt levels ($3.5bn worth as of March) could disrupt these good intentions.
#4: Dividend yields north of 7%!
At 99p per share GCP Infrastructure Investments falls just inside penny stock territory below £1. It’s a stock I think is worth serious attention because of its enormous 7.1% dividend yield. As the name suggests, this UK share is involved in the creation of infrastructure projects. But because it invests in the debt than these building programmes rack up rather than spending to acquire equity, this investment trust is a less-risky way to play this market. It’s a point that my Foolish colleague Jack Tang has discussed in some detail. Remember though that 60% of its property portfolio is in the highly-regulated renewable energy sector. This leaves future profit levels at the mercy of lawmakers.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.
Motley Fool UK 2021