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Steppe Cement‘s (LSE:STCM) a penny stock with an above-average dividend yield that’s been building real momentum. In the past month, it’s soared 65%, taking the one-year gain to 103%. Over two years, it’s gone from 13p to 35p, a 170% improvement.
So some eagle-eyed bargain-hunters who bought and held on for the ride have done very well. Yet interestingly, the penny stock’s still offering a 5.6% dividend yield. Could this be a concrete income opportunity to consider at 35p?
What it does
Steppe Cement makes and sells cement in Kazakhstan. In 2023, profits were ravaged by soaring inflation as the company struggled to pass rising production costs onto customers.
Construction stalled, leading to less cement demand. The stock lost half its value that year then continued sliding in 2024.
A step change in performance
On 9 September though, the company reported a massive turnaround in profitability for the first six months of the year. It swung from a net loss of $0.5m to a net profit of $9m. Operating profit exploded from virtually nothing to $11.8m.
Delivered cement price rose 24% in local currency. Meanwhile, its share of the Kazakh cement market reached roughly 15%, an increase of 2%.
The company ended the period with a net cash position of around $16.7m. And there was a $35m upgrade to the cement production line, expanding capacity to 2.5m tons, all financed from cash flows rather than debt.
Is the dividend reliable?
The cement maker scrapped its dividend in 2023, but in this month’s update the board recommended an interim dividend of 2p per share. This will be paid sometime in October.
Now, this 2p dividend alone is about 5.6% of the current share price. If the final dividend matches the interim, the forward-looking yield currently exceeds 11%.
But can the final dividend be trusted? After all, the payout has been all over the place in the past, reflecting the cyclical nature of cement demand.
Ultimately, capital expenditure priorities will dictate what level of income shareholders receive. There could be no dividend come the final results. But from what I can gather (forecasts are sparse), there might indeed be an ultra-high yield here.
Valuation
Meanwhile, the stock looks cheap. The price-to-sales ratio is 0.87 and the price-to-earnings multiple is just 8.1. Add in that potential blockbuster yield, and there could be a lot of value on offer.
What risks are there?
That said, the fact we’re dealing with a cement maker in Kazakhstan makes this penny stock inherently risky. The firm just warned that inflation in the country remains high, at 10.3%, though that was down from 11.8% in H1 2025 (and 21% in 2023!). There’s also currency risk here if the Kazakhstani tenge weakens against the US dollar.
Could more big gains be ahead?
This month, the National Bank of Kazakhstan cut the base rate to 16.25%, from 18% between October 2025 and early June 2026. So this seems to suggests that the operating environment is gradually improving for Steppe Cement.
Personally, it’s too risky for my liking. But due to the low valuation and potentially sky-high dividend yield, this penny stock may be worth considering, assuming you have a cement-lined stomach. It could generate attractive long-term returns.
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Ben McPoland has no position in any of the companies mentioned.
This story originally appeared on Motley Fool
