CHNL
Chainlink ETF
stock BATS ETF

Some penny stocks do well over the long term.
Fifteen years ago I bought shares in Miscor Group (MIGL) at $0.12/sh, which I think counts as a "penny stock". They were acquired by IESC at a "0.3118:1 exchange" on 9/13/2013, so my cost basis is $0.40/sh. Still HODLing these shares.
Back in 2009 I bought shares in Channell Commercial (CHNL) at $0.05/sh (I doubled down my initial position from a year earlier bought at $0.50/sh), and they went dark in 2012. After no news for nearly a decade they suddenly started paying a dividend that was a bit more than my cost basis in 2020, 2022, and 2023, then paid out \~$26.50/sh in dividends in 2024. Last year they were acquired by Prysmian for $96.82/sh and six months ago added another $19.76/sh earnout.
Back in 2010 I bought shares in bankrupt All American Semiconductor (SEMIQ), first lot at $0.01/sh and tripled down a week later at $0.003/sh. This one also went dark until suddenly in May 2016 they paid out $5.68/sh from their successful antitrust suit involving computer displays. A subsequent antitrust suit involving capacitors didn't fare as well, but they still got a few small defendants to settle, so the total payout from SEMIQ was $7.24/sh.
In my experience these large long-term penny stock gainers are rare: I have hundreds of bets that wiped out, maybe a few dozen that paid out small (like last month Star Buffet paid out in one account but not the other because the idiot broker PREM'd my shares three years ago), and only a handful won big. But taken together I can't complain. The key IMO is to avoid the obvious traps, the hyperdiluters described in the OP, you can spot most of these from their 8k filings on SEC Edgar.

Some penny stocks do well over the long term.
Fifteen years ago I bought shares in Miscor Group (MIGL) at $0.12/sh, which I think counts as a "penny stock". They were acquired by IESC at a "0.3118:1 exchange" on 9/13/2013, so my cost basis is $0.40/sh. Still HODLing these shares.
Back in 2009 I bought shares in Channell Commercial (CHNL) at $0.05/sh (I doubled down my initial position from a year earlier bought at $0.50/sh), and they went dark in 2012. After no news for nearly a decade they suddenly started paying a dividend that was a bit more than my cost basis in 2020, 2022, and 2023, then paid out \~$26.50/sh in dividends in 2024. Last year they were acquired by Prysmian for $96.82/sh and six months ago added another $19.76/sh earnout.
Back in 2010 I bought shares in bankrupt All American Semiconductor (SEMIQ), first lot at $0.01/sh and tripled down a week later at $0.003/sh. This one also went dark until suddenly in May 2016 they paid out $5.68/sh from their successful antitrust suit involving computer displays. A subsequent antitrust suit involving capacitors didn't fare as well, but they still got a few small defendants to settle, so the total payout from SEMIQ was $7.24/sh.
In my experience these large long-term penny stock gainers are rare: I have hundreds of bets that wiped out, maybe a few dozen that paid out small (like last month Star Buffet paid out in one account but not the other because the idiot broker PREM'd my shares three years ago), and only a handful won big. But taken together I can't complain. The key IMO is to avoid the obvious traps, the hyperdiluters described in the OP, you can spot most of these from their 8k filings on SEC Edgar.