Grow your dividends alongside your job earnings with these Australian stocks

Australian stocks can be a very effective pick for dividends with how generous plenty of businesses are.

The ASX is known for having a relatively high dividend payout ratio, partially because companies want to unlock some of the franking credits for shareholders. The higher payout of franking credits also means a larger cash payout too.

Which businesses are providing a good and growing cash payout? These two are among my favourites.

Coles Group Ltd (ASX: COL)

Coles is an impressive supermarket business with a large national store network and a significant supply chain. It’s those two elements that give the business a competitive advantage over most other supermarket businesses across the country.

Another advantage that Coles has over smaller competitors is that it offers a wide range of own-brand and exclusive products, as well as a significant e-commerce offering.

A growing Australian population is a useful tailwind for Australian stocks’ earnings, while high-tech new warehouses will improve margins due to efficiencies and stock flow, as well as providing a greater online offering.

In terms of the dividend, Coles has been consistently growing its annual payout each year since 2019 when it first started paying a dividend to shareholders following the demerger from Wesfarmers Ltd (ASX: WES).

In the FY26 half-year result, Coles reported that its underlying net profit after tax (NPAT) grew by 12.5% and the interim dividend was hiked 10.8% to 41 cents per share.

The forecast on Commsec suggests the business could pay an annual dividend per share of 76.6 cents in FY26. That suggests a possible grossed-up dividend yield of 5%, including franking credits, for FY26.

Universal Store Holdings Ltd (ASX: UNI)

Universal Store is a leading ASX retail share that sells to younger, fashion-focused shoppers. Its two main brands are Universal Store and Perfect Stranger, which are driving very impressive progress for the business.

Its apparel offering is clearly resonating with customers because growth remains strong and in double-digit territory. In the first half of FY26, it reported that total revenue increased by 14.2% and underlying net profit grew by 22%.

The good profit growth enabled the Australian stock to hike its interim dividend by 18.1% to 26 cents per share.

I’m expecting the company’s net profit could continue rising thanks to a growing store network, rising profit margins and solid like-for-like sales growth from its existing store network.

The second half of FY26 started strongly, with sales growth of 13.5% year-over-year. I think this bodes well for dividend growth for the rest of FY26.

The projection on Commsec suggests that the business could pay an annual dividend per share of 40.6 cents per share in FY26, translating into a possible grossed-up dividend yield of 7.3%, including franking credits.

The post Grow your dividends alongside your job earnings with these Australian stocks appeared first on The Motley Fool Australia.

More reading

• 3 ASX dividend shares with yields over 3% today
• 2 ASX shares highly recommended to buy: Experts
• After falling 14%, this ASX value stock looks filthy cheap with a P/E of just 15!
• 3 ASX shares I’d buy today and not check for a year
• These cheap ASX dividend shares could rise 20% to 30%

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Universal Store and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.