Top 2 Hidden ASX Dividend Stocks to Buy Now!

When it comes to building a portfolio that delivers reliable income, dividend stocks on the ASX (Australian Securities Exchange) are a top choice for savvy investors. In an unpredictable market, dividend-paying stocks stand out for their ability to provide consistent returns through regular payouts, making them perfect for anyone looking to grow their wealth or enjoy passive income. With so many options available, finding the right stocks can feel overwhelming. That’s why we’ve done the heavy lifting for you. This guide dives into two of the best dividend stocks to invest in right now — offering strong yields, solid financials, and impressive track records of rewarding shareholders.

1. Smartgroup Corporation Limited (ASX: SIQ)

Smartgroup Corp. Ltd. engages in the provision of employee benefits and workforce optimization services. It operates through the following segments: Outsourced Administration, Vehicle Services, and Software, Distribution and Group Services (SDGS). The Outsourced Administration segment includes salary packaging administration, leasing, and share plan administration. The Vehicle Services segment provides end-to-end fleet management services. The SDGS segment offers salary packaging software solutions, distribution of vehicle insurances, and information technology services. The company was founded in 1999 and is headquartered in Sydney, Australia.

From the Company Reports:

Smartgroup Corporation Limited (ASX: SIQ) has demonstrated robust financial performance in the first half of 2024, highlighted by a 27% year-over-year revenue increase to $148.5 million.

Operating EBITDA rose 20% to $56.2 million, with an EBITDA margin of 40% (excluding South Australian government contract expenses), marking a slight improvement. Including all expenses, the margin stood at 38%.

Net Profit After Tax and Amortisation (NPATA) grew by 16% to $34.1 million, while statutory net profit climbed 18% to $34.3 million.

The company showcased effective cash management with operating cash flow at 108% of NPATA, underlining its liquidity strength. Its low net debt ratio of 0.5x EBITDA further reflects financial resilience and agility.

Complementing this performance, Smartgroup declared an interim fully franked dividend of 17.5 cents per share, signaling confidence in its ability to sustain growth and reward shareholders.

Smartgroup offers a compelling investment opportunity, having successfully returned to pre-COVID levels in terms of both revenue and earnings. Although the company has achieved record financial results, its stock is currently trading below the peak prices observed in 2018 and 2019, which may indicate a potential undervaluation. With projections suggesting that revenues and earnings are set to reach new heights by the end of 2024, the company is well-positioned for substantial growth, enhancing its market standing. The recent decrease in valuation presents an attractive entry point for investors, as the price-to-earnings (P/E) ratio has fallen from historical averages of 18-20x to a more accessible 15x. Additionally, the strong dividend yield of 6.35% further increases SIQ’s attractiveness as a source of income. This combination of growth prospects and a robust dividend yield renders SIQ an appealing option for both value-oriented and income-seeking investors.

2. Cog Financial Services Limited (ASX: COG)

COG Financial Services Ltd. engages in the provision of equipment finance, funds management, and lending sector. It operates through the following segments: Finance Broking and Aggregation; Funds Management and Lending; and All Other. The Finance Broking and Aggregation segment comprise business units on the aggregation of broker volumes through scale, and finance broking focused on a range of finance products and asset types. The Funds Management and Lending segment is focused on the management of investment funds and providing financing arrangements to commercial customers for essential business assets. The All Other segment includes equity investment of in the associate Earlypay Limited, and corporate office function provided by the ultimate parent entity. The company was founded on June 11, 2002 and is headquartered in Chatswood, Australia.

Dividend Profile:

The company increased its dividend payment substantially from $0.02 per share in 2020 to $0.08 per share in 2021 and has successfully maintained this level in subsequent years. Over this period, the dividend yield has also risen significantly, driven by unfavorable stock price trends. The yield has grown from 2.71% in 2020 to 7.47% in 2024, and currently stands at a compelling 9.13%, offering an attractive return to shareholders.Why Dividend Stocks Are Ideal for Income Investors

Dividend stocks provide a two-fold advantage: regular income through payouts and the potential for stock price appreciation. With Australia’s tax-friendly franking credits, dividends from ASX-listed stocks can be even more lucrative, offering tax-effective income to Australian investors.

Cog Financial, despite achieving several operational and financial breakthroughs in recent years, continues to face adverse market sentiment. While its net income in 2024 is lower than in 2022, the company’s overall growth trajectory over the past seven years has been robust, and its future prospects remain attractive. Moreover, anticipated rate cuts in the coming year could support a rebound in earnings, particularly given the strength and consistent growth of the company’s operating income. These factors suggest potential for capital gains, while the company’s reliable and promising annual yield continues to offer a compelling income generating potential for shareholders.