Whereas it’s doable to seek out some penny shares which might be actual bargains, some change into full duds. Listed below are two I’d fortunately purchase for my portfolio if I had spare money to speculate. Each pay dividends.

Topps Tiles

I already personal Topps Tiles (LSE: TPT) however can be glad to ‘Topp’ up my holding!

The corporate is answerable for one in each 5 tiles offered throughout the UK. It additionally sells different flooring coverings. With an in depth community of shops open each to commerce and retail clients, a sizeable digital operation and deep market understanding, I believe the corporate is right here for the lengthy haul.

There are challenges although. Revenues within the first half slid 6% in comparison with the identical interval final yr, and earlier than tax the corporate swung from a £1.7m revenue to a £1.5m loss. A weak housing market may see gross sales fall additional if constructing charges drop.

However as a long-term investor, I believe the share is well-positioned. I like its 8.9% dividend yield.

After falling 16% previously yr and 37% over 5 years, how ought to I see the share? Is it an missed cut price or as a weakly performing enterprise with a share price in long-term decline?

There may very well be validity in both view. I personal the shares and plan to maintain holding them as a result of, though the present buying and selling surroundings is troublesome and will see income fall, I see Topps as nicely run and neatly positioned to maintain a key position in a market I anticipate to learn from long-term buyer demand.

NWF Group

The enterprise of distributing gas, meals and animal feeds will not be glamorous. Nevertheless it has different issues going for it. Because the previous saying goes, the place there’s muck, there’s brass.

Demand is excessive and more likely to be resilient over the long run. Buyer relationships and depot location comfort can provide an organization pricing energy in what initially seems to be like a commoditised market.

Take NWF Group (LSE: NWF) for instance. The enterprise has been worthwhile in recent times and final yr revenues topped a billion kilos. But the market capitalisation of the inventory is underneath £90m.

One cause for that’s that this can be a excessive income, low revenue margin trade. These 10-figure revenues final yr generated £15m in income after tax, equating to a paper skinny internet revenue margin of 1.4%.

Rising gas or different prices may eat into such skinny margins. Decrease demand for home heating oils helped push first half income earlier than tax down 36% yr on yr.

Regardless of that, the enterprise has maintained its underlying full-year expectations. The share trades on a price-to-earnings ratio of 6 and presents a dividend yield of 4.4%.

If I had spare money to speculate, I’d be glad to tuck just a few NWF shares into my portfolio. It’s a third cheaper than it was a yr in the past and I stay upbeat in regards to the enterprise prospects right here.