I’d buy 9,100 shares of this rising penny stock for £1,000 a year in passive income

 I would buy 9,100 shares of this growing penny stock for £1,000 a year in passive income

Buying penny stocks means investors have an increased chance of volatility. But the potential rewards on offer can sometimes make the risk worth it.One small-cap stock I just bought is Ramsdens Holdings (LSE: RFX) . This group of financial services offers foreign currency exchange, mortgage loans and buying and selling jewelry. Buying penny stocks means investors take on an increased chance of volatility. But the potential rewards on offer can sometimes make the risk worth it.

One small-cap stock I just bought is Ramsdens Holdings (LSE: RFX) . This group of financial services offers foreign currency exchange, collateral loans and the purchase and sale of jewelry. During the first half, the company opened six new units in Bootle, Basildon, Bradford, Croydon, Maidstone and Warrington. This brought the total number of stores to 158, excluding the two franchises. The average unit generates around £0.5 million a year.

It plans to open six more in the second half of the year, adding to an already impressive retail footprint. For context, its rival H&T Group, the UK's leading pawnshop, has 273 stores. So Ramsdens is not far behind and management sees "attractive consolidation opportunities in a market that remains highly fragmented".

A big year of passive income

The interim dividend was increased by 22% to 3.3p per share. So brokers now expect the company to pay 10.4p per share this financial year and 11p next year.Now, broker forecasts sometimes turn out to be inaccurate and dividends are not guaranteed. But the FY2024 estimate gives the stock a forward dividend yield of 5%. That means I would need about 9,100 shares at 222p for £1,000 a year in passive income.

They would cost me just over £20k, which is a lot of money to be sure. But the stock is cheap with a forward P/E ratio of 9.3. Plus, the dividend is reassuringly covered by 2.5 times trailing 12-month earnings. So there's a lot here that I like, I feel.

The symbol that can be seen on all sandboxes is three balls suspended from a pole. This is attributed to Saint Nicholas, the patron saint of pawnbrokers, who is said to have given a poor man's three daughters a bag of gold so they could get married. Others associate the symbol with the Medici family of Florence during the Renaissance. Either way, a proven pawnshop business is potentially lucrative, as Ramsdens proves.

In the long term, industry regulation could be a risk, while sales momentum could slow down in the short term. But with Christmas approaching and consumers needing cash or perhaps second-hand jewelry for gifts, the company's growth should continue.Do you like the idea of ​​dividend income? The prospect of investing in a company just once, then sitting back and watching it potentially pay dividends over and over again?

If you are excited by the idea of ​​regular passive income payments, as well as the potential for significant growth on your initial investment…Then we think you'll want to see this report on the Motley Fool Share Advisor - "5 Essential Stocks for Passive Income Seekers." What's more, we're giving away one of these stock tips absolutely free today!

Ben McPoland has positions in Ramsdens Plc. The Motley Fool UK has no position in any of the stocks listed. The opinions expressed about the companies mentioned in this article are those of the author 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 we are better investors with a diverse range of insights.

Are you looking for a lucrative investment opportunity that can potentially generate significant passive income? Look no further as we explore growing penny stocks that could offer you a compelling return on your investment. With the right strategy, 9,100 shares of this promising stock has the potential to generate a consistent passive income of £1,000 per year.

Penny stocks, often defined as stocks trading below £5 per share, can be an exciting but challenging investment avenue. Their low entry costs and high volatility make them attractive to investors looking for substantial gains. However, it is essential to approach penny stock investments with caution and a good understanding of the market.

One penny stock that is attracting the attention of investors and financial experts alike is the . With a track record of consistent growth and a robust business model, this company has the potential to change the game in its industry. As market demand continues to grow, it is well positioned to capitalize on this trend.

Several factors contribute to the potential success and attractiveness of its penny stock as a pioneer that addresses a critical need in the market. This innovation gives them a competitive edge and ensures continued demand and growth.

Market share expansion: The company's proactive approach to market share expansion is commendable. With a growing customer base and strategic partnerships, it is poised to capture a more significant portion of the market.

Strong financial performance: Analyzing the financial health of any company is vital, especially for penny stocks. has demonstrated consistent revenue growth and prudent financial management, indicating a stable foundation for future expansion.

Experienced Management Team: A strong leadership team is critical to the success of any company. management brings rich experience and a clear vision for the future.Investing for passive incomeNow let's see how 9,100 shares in  could potentially generate £1,000 in annual passive income Detail how the company's dividends, growth potential or other factors contribute to the estimated passive income.

Remember that all investments carry risks and past performance is not always an indicator of future results. It is essential to do thorough research, diversify your portfolio and consult with a financial advisor if necessary.Investing in penny stocks can be an exciting endeavor that offers the possibility of substantial returns. presents a compelling opportunity to consider with its impressive growth potential and solid path to passive income.

While there are no guarantees in the stock market, it is well poised to benefit from the growth of its industry. With the right strategy, 9,100 shares of this promising penny stock could give you the £1,000 annual passive income you've been looking for. Be sure to use the actual name of the specific penny stock and adjust the details based on current market conditions for maximum relevance and accuracy. Be transparent about the risks involved in investing in stocks.