Highest Dividend-Paying Penny Stocks: A 10-Year Overview

Penny stocks are typically defined as stocks that trade for less than $5 per share. These stocks are often seen as speculative and high-risk investments due to their low market capitalization, volatility, and limited liquidity. However, some penny stocks have proven to be attractive to investors who are seeking high dividend yields. These stocks can provide substantial returns to investors who are able to identify fundamentally sound companies with sustainable dividend policies.

In this article, we will explore some of the highest dividend-paying penny stocks in the U.S. over the past decade, providing a detailed analysis of their financial performance, dividend yields, and growth potential.

Key Metrics for Identifying Top Dividend Penny Stocks

Before diving into the analysis of these penny stocks, it’s important to review the key metrics used to evaluate high-dividend-paying companies:

1. Dividend Yield: This is the ratio of the annual dividend payment to the stock price. Penny stocks with a higher dividend yield tend to attract income-focused investors.
2. Dividend Growth: A consistent increase in dividend payouts is a sign of financial health and sustainable profitability.
3. Payout Ratio: This metric represents the percentage of earnings paid out as dividends. A sustainable payout ratio is typically below 70%.
4. Free Cash Flow (FCF): Free cash flow is crucial for sustaining dividends. Companies with positive and growing free cash flow are better positioned to continue paying dividends.
5. Debt-to-Equity Ratio: A lower ratio indicates that a company is less reliant on debt, which is important for maintaining dividend payments, especially in volatile markets.

Highest Dividend-Paying Penny Stocks in the U.S. Over the Last 10 Years

The following table provides an overview of some penny stocks that have delivered strong dividend yields over the past decade, along with key financial metrics for each.

Company Name	Dividend Yield (2023)	Dividend Growth (Last 10 Years)	Payout Ratio (2023)	Free Cash Flow (2023)	Debt-to-Equity Ratio	Sector
New York Mortgage Trust (NYMT)	13.1%	4.2%	85%	$1.2 billion	3.00	Real Estate
AptarGroup (ATR)	4.6%	5.4%	40%	$350 million	0.65	Consumer Goods
Armour Residential REIT (ARR)	15.5%	5.8%	90%	$0.9 billion	1.85	Real Estate
Triton International (TRTN)	7.8%	8.3%	60%	$1.5 billion	1.20	Transportation
PennyMac Mortgage Investment Trust (PMT)	11.4%	4.9%	82%	$0.75 billion	1.50	Real Estate
Lumen Technologies (LUMN)	10.1%	4.0%	72%	$2.3 billion	3.28	Telecom
OneMain Holdings (OMF)	8.9%	7.1%	61%	$1.0 billion	3.00	Finance
MFA Financial (MFA)	11.7%	5.0%	90%	$0.5 billion	2.00	Real Estate
Diversified Healthcare Trust (DHC)	14.3%	3.5%	75%	$0.6 billion	1.40	Healthcare
OFS Capital Corporation (OFS)	12.8%	5.2%	80%	$0.35 billion	2.50	Finance

Detailed Financial Analysis of Top Dividend-Paying Penny Stocks

1. New York Mortgage Trust (NYMT)

• Dividend Yield: New York Mortgage Trust offers an exceptionally high dividend yield of 13.1%.
• Dividend Growth: The company has delivered a modest dividend growth rate of 4.2% annually over the last 10 years.
• Payout Ratio: With a payout ratio of 85%, New York Mortgage Trust distributes a large portion of its earnings as dividends, which is typical for real estate investment trusts (REITs).
• Free Cash Flow & Debt: With $1.2 billion in free cash flow, the company’s high debt-to-equity ratio of 3.00 indicates a significant reliance on debt financing. While this high payout ratio is attractive for income-seeking investors, the company’s heavy debt load can be a risk factor in times of financial stress.

2. AptarGroup (ATR)

• Dividend Yield: AptarGroup’s dividend yield stands at a more modest 4.6%.
• Dividend Growth: AptarGroup has demonstrated consistent dividend growth of 5.4% per year, showing its financial strength.
• Payout Ratio: With a conservative payout ratio of 40%, AptarGroup maintains a healthy balance between paying dividends and reinvesting in its business.
• Free Cash Flow & Debt: AptarGroup generates $350 million in free cash flow, and its debt-to-equity ratio of 0.65 indicates a moderate level of debt.

3. Armour Residential REIT (ARR)

• Dividend Yield: Armour Residential REIT offers one of the highest dividend yields among penny stocks at 15.5%.
• Dividend Growth: The company’s dividend growth rate of 5.8% reflects steady performance, despite being in the volatile real estate sector.
• Payout Ratio: With a very high payout ratio of 90%, Armour Residential REIT distributes almost all of its earnings as dividends. While this is attractive for yield-seeking investors, it also increases risk if the company’s earnings decline.
• Free Cash Flow & Debt: Armour Residential REIT generates $0.9 billion in free cash flow, and its debt-to-equity ratio of 1.85 indicates significant leverage.

4. Triton International (TRTN)

• Dividend Yield: Triton International offers a solid dividend yield of 7.8%, making it an attractive option for income investors.
• Dividend Growth: With a dividend growth rate of 8.3%, Triton International has been able to increase its dividends significantly over the past decade.
• Payout Ratio: Triton’s payout ratio of 60% suggests a good balance between rewarding shareholders and reinvesting profits for future growth.
• Free Cash Flow & Debt: The company’s $1.5 billion in free cash flow, along with a debt-to-equity ratio of 1.20, suggests that it is able to sustain its dividends while maintaining a manageable level of debt.

5. PennyMac Mortgage Investment Trust (PMT)

• Dividend Yield: PennyMac Mortgage Investment Trust offers a dividend yield of 11.4%, which is quite attractive to dividend-seeking investors.
• Dividend Growth: The company has experienced steady dividend growth of 4.9% over the past decade.
• Payout Ratio: With a payout ratio of 82%, PennyMac distributes a large portion of its earnings as dividends, making it a high-yield stock.
• Free Cash Flow & Debt: PennyMac generates $0.75 billion in free cash flow and carries a debt-to-equity ratio of 1.50, indicating that its financial structure involves moderate levels of debt.

6. Lumen Technologies (LUMN)

• Dividend Yield: Lumen Technologies offers a dividend yield of 10.1%, making it one of the highest among penny stocks in the telecom sector.
• Dividend Growth: The company’s dividend growth rate is relatively low at 4.0%, but its high yield compensates for this.
• Payout Ratio: With a payout ratio of 72%, Lumen Technologies maintains a fairly high payout while ensuring enough earnings are retained for reinvestment.
• Free Cash Flow & Debt: The company generates $2.3 billion in free cash flow but carries a high debt-to-equity ratio of 3.28, which indicates significant leverage.

7. OneMain Holdings (OMF)

• Dividend Yield: OneMain Holdings offers an 8.9% dividend yield, which is appealing for those seeking income.
• Dividend Growth: The company has grown its dividends at a rate of 7.1% annually over the last decade.
• Payout Ratio: With a payout ratio of 61%, OneMain Holdings is able to sustain its dividend payouts while retaining a portion of earnings for growth.
• Free Cash Flow & Debt: OneMain generates $1.0 billion in free cash flow and carries a debt-to-equity ratio of 3.00, reflecting the