I love owning ASX shares that offer investors a pleasing combination of dividends and capital growth. The combination allows our portfolios to grow in value, while delivering rising cash payments to our bank account.
We don't necessarily need to look at the biggest businesses for ideas that can deliver good performance – I'd prefer to look at businesses further down the market capitalisation list because they are earlier on with their growth plans than major ASX blue-chip shares.
I believe there's plenty of growth to come for the following two businesses.
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Universal Store Holdings Ltd (ASX: UNI)
It owns a portfolio of premium youth fashion brands, with both retail and wholesale businesses. Universal Store's main businesses are Universal Store and Perfect Stranger. It also has CTC (trading as THRILLS and Worship brands).
This business currently operates 121 physical stores across Australia as well as online channels.
The company says its strategy is to grow and develop its premium fashion apparel brands and retail formats targeting fashion-focused customers.
It's still growing revenue at a strong pace – it gave an update that said that retail sales for the first 43 weeks of FY26 showed 14% growth, with Universal Store growth of 11.8%, Perfect Stranger growth of 39.8% and CTC growth of 14.5%.
The company's mid-point of its FY26 guidance suggests the business could grow sales by 11.5% and operating profit (underlying EBITA) is expected to grow by 15.4%. It's a great sign for a business when profit is rising faster than sales, as it's usually the net profit that investors value a business on, rather than its revenue growth.
The ASX share has grown its annual dividend each year since 2021 when it first started paying a dividend. According to the forecast on CMC Invest, it's projected to pay an annual dividend per share of 41.7 cents in FY26, which translates into a grossed-up dividend yield of 8.8%, including franking credits.
Propel Funeral Partners Ltd (ASX: PFP)
Propel is the second-largest funeral provider in Australia and New Zealand. It operates from 208 locations, including 41 cremation facilities and nine cemeteries.
While morbid, the business is exposed to long-term growth tailwinds because of Australia's ageing and growing populations.
According to Propel, the number of deaths in Australia is expected to rise by an average of 2.9% per year between 2026 to 2035, and then another 2.4% per year between 2036 and 2045. That's not the biggest growth rate, but the steady progression could lead to solid compounding over time.
Propel can benefit from both the rising number of funerals, as well as growth of the average revenue per funeral, which is roughly in line with inflation.
Additionally, the business is steadily growing its geographic presence through acquisitions – helping grow its top line and scale.
According to the forecast on CMC Invest, the Propel dividend per share could climb to 16.6 cents by FY28. That translates into a possible grossed-up dividend yield of 6.5%, including franking credits, at the time of writing.
