Top 2 Hidden Gem Dividend Stocks on the ASX

Dividend hunters often look at the same familiar names—banks, miners, and telcos. But sometimes the most interesting opportunities lie just outside the spotlight. Two such “hidden gems” on the ASX are Adairs Ltd (ASX: ADH), a household retailer undergoing a strategic reset, and GTN Ltd (ASX: GTN), a global traffic-audio advertising network with a strong balance sheet. Both companies may not get the same coverage as the blue-chip dividend giants, but they are quietly delivering cash returns to shareholders while setting themselves up for future growth.

Let’s take a closer look at why Adairs and GTN are worth a spot on the radar of income investors.

Adairs (ASX: ADH): Cash Returns While Resetting the House

Adairs is a familiar brand for many Australians, known for its stylish homewares and furnishings. But beneath the surface, the company has been doing more than just selling cushions and linen. Its FY25 results signaled a reset year, where management focused on cleaning up margins and improving operational efficiency—while still rewarding investors with dividends.

FY25 Snapshot

• Group Sales: $618.1 million (+4% year on year)
• NPAT: $25.7 million
• EPS: 14.6 cents, with margins impacted by product mix and freight costs
• Dividend: Final fully franked 4.0 cents per share (payable 7 October 2025), bringing total FY25 dividends to 10.5 cents

While the dividend was lower than FY24, it remains comfortably covered by both earnings and cash flow. Importantly, the company reported a strong start to FY26, with sales in the first eight weeks up 22.6% compared to the prior year—driven mainly by the core Adairs brand.

What’s Changing

Adairs is rolling out a strategic reset, which includes:

• Tighter control of inventory levels
• Supply chain improvements
• Sharper brand positioning
• Productivity gains in its Focus on Furniture division

These changes are aimed at boosting margins and supporting sustainable growth.

Why It’s a Hidden Gem

The market often penalizes retailers during periods of transition. However, Adairs has shown it can maintain dividend payments even while reshaping its business. If the early signs of sales momentum in FY26 continue, investors could enjoy the double benefit of earnings recovery plus franked dividends. That makes ADH more than just a retailer—it’s a potential income compounder in disguise.

GTN (ASX: GTN): High Yield, Capital Return, and a Net Cash Buffer

GTN may not be a household name for consumers, but if you’ve listened to traffic updates on radio, you’ve likely encountered its product. The company operates one of the largest traffic-audio advertising networks globally, with long-term partnerships across multiple regions.

FY25 was a noisy year for GTN. Revenue softened slightly, and the company posted a bottom-line loss. Yet, instead of retreating, management doubled down on shareholder returns—an unusual move for a company under pressure.

FY25 Snapshot

• Revenue: $180.2 million (−2% year on year)
• Reported NPAT: −$6.1 million (largely due to non-cash items)
• Bank Debt: Reduced by $8 million
• Net Cash Position: $21.1 million at 30 June 2025

Cash to Shareholders

Despite the headline loss, GTN kept rewarding investors:

• Paid $8.2 million in dividends during FY25
• Announced a capital return of $0.23 per share in August 2025
• Conducted on-market buybacks

At recent share prices, the trailing yield for shareholders works out to be in the double-digits—a rare feat in today’s market.

Outlook

The company’s affiliate partnerships, especially in autos and furniture advertising, remain strong. With a lean cost base and no net debt burden, GTN is well-placed to benefit when the advertising cycle turns upward. The presence of major shareholder Viburnum also adds confidence, given its track record of active stewardship.

Why It’s a Hidden Gem

Most investors overlook GTN because of its earnings volatility and advertising-market exposure. But with a net cash buffer, continued capital distributions, and leverage to a cyclical recovery, GTN offers an unusual mix of income and upside. For dividend hunters, this is the kind of asymmetric opportunity that rarely appears in large-cap stocks.

Income Angles to Consider

When looking at dividend stocks, sustainability matters just as much as the yield headline. Here’s how these two stack up:

• Franking Credits: Adairs offers fully franked dividends, while GTN’s franking depends on the level of Australian tax paid.
• Payout Frequency: Both pay semiannual dividends, but GTN supplements with buybacks and special capital returns.
• Sustainability: Adairs’ payout is supported by earnings and improving sales momentum. GTN’s is supported by its net cash position, though an advertising rebound will be key to longer-term stability.

Key Risks

No stock is risk-free. Investors should keep an eye on:

• Adairs: Retail margin pressure from freight costs, consumer spending sensitivity, and execution risk in its Focus on Furniture division.
• GTN: Dependence on ad spending cycles, foreign exchange impacts across global operations, and the need to keep affiliate partnerships locked in.

Final Thoughts

Hidden gems aren’t always about explosive growth stories. Sometimes they’re about reliable cash returns tucked inside businesses going through a reset or navigating a cycle.

Adairs is rebuilding margins while still paying franked dividends. GTN is distributing hefty amounts of cash to shareholders despite market challenges, thanks to its net cash position. Both companies prove that dividend opportunities on the ASX don’t have to come only from the banking giants or resource heavyweights.

For investors willing to look beyond the obvious, ADH and GTN show that quiet achievers can sometimes be the most rewarding sources of income.

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