ASX dividend shares that increase their payout every year could be the reassuring picks that passive income investors are looking for.
A rising payout will offset inflation, boost the amount of cash in investors' bank accounts, and should signify a rising underlying value (whether that's rising profits or a larger net asset value (NAV)).
The two businesses below are building a very impressive dividend record.
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Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This business currently has the longest-running dividend growth streak. If it keeps increasing the payout, then it will always have the best record on the ASX. The investment house has hiked its regular annual dividend payout every year since 1998, so it's getting close to 30 years of continuous increases.
There are some US companies that have increased the annual payout for more years in a row than Soul Patts, but I think the ASX dividend share holds one key advantage.
It owns a diversified portfolio of investments across a range of industries. Soul Patts is not stuck with operations in a single industry like a lot of businesses. It's in resources, telecommunications, industrial properties, building products, financial services, swimming schools, credit, agriculture and plenty more.
That portfolio of investments pays Soul Patts with cash flow each year, allowing it fund a growing dividend and make new investments with the retained amount.
I think this business has the best chance of continuing to grow its payout out of all S&P/ASX 200 Index (ASX: XJO) shares.
At the current Soul Patts share price, I think it could pay a grossed-up dividend yield of around 4%, including franking credits in FY26.
Universal Store Holdings Ltd (ASX: UNI)
This is one of the impressive operators in the retail space when it comes to dividends, in my view. It started paying an annual dividend in FY21 and has increased its passive income each year since then, which not many retailers have done.
There are a few businesses within this ASX dividend share – Universal Store, Perfect Stranger and CTC. The impressive growth of Universal Store and Perfect Stranger has allowed the business to fund that dividend growth.
In FY25, group sales grew 15.5%, with Universal Store sales growth of 15% to $280.9 million and Perfect Stranger sales growth of 83.1% to $25.5 million. This helped earnings per share (EPS) rise by 14.6% to 45.4 cents per share, funding an 8.5% rise of the dividend per share to 38.5 cents.
At 30 June 2025, the business had 111 physical store locations, including 84 Universal Store locations and 19 Perfect Stranger stores. It has an ambition of 100 or more Universal Store locations and at least 60 Perfect Stranger stores.
FY26 has started well – in the first 17 weeks of FY26, Universal Store total sales were up another 11.4% and Perfect Stranger total sales were up 40.5%.
According to the forecast on CMC Invest, the ASX dividend share is projected to pay an annual dividend per share of 39 cents in FY26. That translates into a potential grossed-up dividend yield of 6.5%, including franking credits.
