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A penny share with a 7.54% yield that most have probably never heard of

The Motley Fool logo The Motley Fool 19.06.2023 13:24:23 Jon Smith
Smartly dressed middle-aged black gentleman working at his desk

Penny shares are companies that have a share price below 100p and a market-cap below £100m. Usually, these small-cap stocks are bought by investors that feel there's large upside potential for growth. Although it's hard to find ideas that include both growth and income, here's one that has caught my eye.

Maven Income and Growth VCT 4 (LSE:MAV4) is a trust that aims to generate long-term capital growth and income, ticking both boxes. At the moment, it has a share price of 62p with a market-cap of £87m.

Over the past year, the share price is down 9% with the dividend yield at 7.54%.

For the savvy among us, the '4' referred to in the name is the fourth different fund Maven has publicly listed. The leading private equity and property manager has different funds, with the mark 3 fund launching in 2001, and this one launching in 2004.

This means I'm getting access to a larger investment manager than one that simply operates a single trust.

The company tries to achieve returns of income and growth from investments in both public and private companies. In the latest annual report, the makeup was 68.1% in unlisted investments, 2.8% in listed, and the rest in cash.

I like this allocation because the minimum investment size in unlisted stocks is often very high for a retail investor. It's quite hard to get this kind of exposure, which is why buying this stock is a much easier way to dip a toe in the water.

The largest sector currently invested is software and technology (34%). Next up is business services (22%), followed by pharma and healthcare (16%). I feel that all three of these areas are ones that can deliver profits in years to come. In particular, tech shares are rebounding nicely after a rather torrid 2022, with AI software the hot buzzwords right now.

Last year, the business made 11 new private investments. Even though these all sound promising, the risk is illiquidity. What this means is that it's very hard to sell a stake in a small company, especially if the shares aren't freely traded on the stock market.

It also makes it harder to put an accurate value on the investment at any one time. So the share price versus the net asset value of the portfolio could be quite different.

Ultimately, I believe this is an investment that could yield some good results. To reduce risk, I'd look to include it as part of a well-diversified existing portfolio.

The post A penny share with a 7.54% yield that most have probably never heard of appeared first on The Motley Fool UK.

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Jon Smith 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.

lundi 19 juin 2023 16:24:23 Categories: The Motley Fool

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