As a dividend investor myself, I like to look at ASX shares that are growing and providing rising payouts.
Some ASX dividend shares are more appealing than others right now. Strong share price gains have pushed up valuations, therefore deprressing the dividend yield.
Thankfully, I'm expecting both of the businesses covered in this article to hike their dividends over time, though this may not be the best time to invest – they were a lot cheaper 12 months ago!
I'd be a happy shareholder owning the below stocks, and I'd certainly put them on a passive income watchlist if they're not already on there.
Image source: The Motley Fool
Nick Scali Ltd (ASX: NCK)
Nick Scali is a furniture retailer with three businesses – Nick Scali, Plush and a UK division. I think it's a good option for dividend investors.
The business earns impressive margins in a competitive market and I'm optimistic its net profit can rise in the coming years thanks to a mixture of RBA rate cuts, a store rollout plan in Australia and New Zealand, major plans for the UK and overall scale benefits.
The ASX share thinks it can add at least 70 more stores in ANZ in the long-term to at least 180 and up to 200. The UK population is well over double Australia's population, so I think it's very achievable for Nick Scali UK to reach 180 stores in the long-term.
In FY24, the UK business had a gross profit margin of 42% and this grew to 47.1% in FY25. In May and June 2025, trading in the rebranded Nick Scali (from Fabb Furniture) stores achieved a gross profit margin of 58%. I think this bodes very well for profitability improvements in the UK in FY26 and beyond.
In the first month of FY26, it reported ANZ written sales rose 7.7% and it has already confirmed five ANZ new stores will be opened during the year.
After the strong increase of the Nick Scali share price, its current grossed-up dividend yield is under 4%, including franking credits. But, I believe the ASX share's profitability and dividend can increase in the coming years. Impressively, Nick Scali grew its dividend every year for a decade before it was impacted by the high cost of living. That sort of history may appeal to dividend investors, in my view, though another decade of dividend growth isn't guaranteed.
Universal Store Holdings Ltd (ASX: UNI)
Universal Store has a portfolio of premium youth fashion brands, across both retail and wholesale businesses.
The key business is Universal Store and its other businesses include Perfect Stranger and CTC (trading as THRILLS and Worship). These brands are aimed at delivering a carefully curated selection of on-trend apparel products to a target 16- to 35-year-old fashion-focused customer. It currently operates around 110 stores in Australia.
The Universal Store share price has soared more than 40% in the last year, at the time of writing, which is great for dividend investors.
Investors have been very impressed by the progress of its expansion in recent years and the financial growth numbers suggest further gains in the coming years.
In the FY25 half-year result, it reported total sales growth of 16.2% to $183.5 million, a 90 basis point (0.90%) increase of the gross profit margin to 60.6% and a 16% rise of underlying net profit to $23.2 million. This helped fund a 33.3% rise in the interim dividend to 22 cents per share.
Rolling out more Universal Store locations makes a lot of sense, but it's the Perfect Stranger brand that is particularly exciting. In HY25, Perfect Stranger sales grew 92.3% to $12.6 million, with like-for-like sales growth of 25.3%.
If the business continues growing the number of stores, particularly Perfect Stranger locations, then the company's net profit could be on a very good trajectory.
At the time of writing, it offers a grossed-up dividend yield of 6.6%, including franking credits.
