Best of Both Worlds: 2 ASX Stocks Offering Growth and Dividends

For investors who want cash today without giving up compounding tomorrow, a “growth plus income” sleeve can be a powerful anchor. Two ASX names fit the brief right now: TechnologyOne (ASX: TNE) and Telstra Group (ASX: TLS). Both just delivered solid FY25 updates, both run dependable recurring‑revenue engines, and both are returning more capital to shareholders while reinvesting for durable growth. Different industries, same outcome: rising profits, rising payouts, and clear pathways to keep the flywheel spinning.

TechnologyOne (TNE): ARR compounding, margins expanding, dividends rising

TechnologyOne is Australia’s largest enterprise SaaS ERP platform for governments, higher education, and corporates—and it keeps executing. The first half of FY25 was another record period, extending a long streak of double‑digit growth across the right quality indicators.

1. FY25 H1 by the numbers: Revenue rose 19% to $285.7 million; NPAT lifted 31% to $63 million; annualised recurring revenue (ARR) climbed 21%. Management upgraded full‑year profit guidance to 13–17% growth, signalling confidence in pipeline conversion and operating leverage.
2. Quality of growth: Net revenue retention hit 118% (above the 115%+ target), churn was around 0.3%, and ARR in the UK jumped 50%, highlighting international runway. Government and education verticals remained strong, and R&D investment of $68.8 million in the half deepened the moat across modules and industry solutions.
3. Dividend momentum: The interim dividend increased 30% to 6.6 cents per share. With a long history of semi‑annual payouts and an annual DPS tracking around 24 cents (trailing), investors are seeing cash returns rise alongside profits—even if the current yield is modest.

Why it fits “growth + dividends”: TNE’s sticky, high‑margin subscription base compounds ARR, while a disciplined payout policy steadily shares the gains. With a stated ambition to surpass $1 billion ARR by FY30, the company’s earnings and dividend runway both look long. The model builds resilience (low churn, high NRR), while expanding modules and cloud migrations add upsell torque without stretching risk.

What to watch:

1. UK execution: sustaining 40–50% ARR growth as the footprint scales.
2. Net revenue retention: keeping NRR above 115% as module adoption broadens.
3. Churn and ARPU: holding ultra‑low churn while lifting value per customer through SaaS.

How to think about position sizing: TNE often trades at a premium multiple—justified by durability and visibility—so it can be a core, long‑duration compounder where periodic pullbacks are opportunities rather than warnings.

Telstra Group (TLS): Cash engine with rising payouts and buy‑backs

Telstra’s FY25 result showcased a steadier, stronger cash engine: mobile is growing, costs are in focus, and the balance sheet supports bigger shareholder returns—all while critical network investments continue. It’s yield with a plan.

1. FY25 scorecard: Total revenue came in at $23.13 billion. NPAT was $2.17 billion (+33.9%), boosted by cycling prior‑year items; underlying NPAT rose 1.8%. The final dividend of 9.5 cents took FY25 ordinary dividends to 19.0 cents per share, fully franked (+5.6% year on year).
2. Capital returns: A $750 million on‑market buy‑back was completed, with another buy‑back announced—clear signals of confidence in cash earnings and cash EPS (22.4 cents in FY25). Fully franked dividends plus buy‑backs give investors dual levers of return.
3. Investing to stay ahead: 5G population coverage is ~95%, with the mobile network reaching 99.7% of the population. Telstra flagged additional mobile capex over four years within BAU, continued progress on intercity fibre, a satellite‑to‑mobile text launch, and deeper data/AI collaboration (e.g., with Accenture) to sharpen operations and customer experience.

Why it fits “growth + income”: A resilient, mobile‑led earnings base funds fully franked dividends and buy‑backs, while disciplined capex in 5G, fibre, and AI preserves competitive edge and pricing power. The flywheel is straightforward: defend and expand the core network, translate ARPU and efficiency gains into cash, and return more of it—without starving the future.

What to watch:

1. Mobile ARPU and market share: evidence that network quality and brand continue to command premium pricing.
2. Margin trajectory: cost‑out and automation offsetting inflation and investment cycles (5G Advanced, fibre).
3. Cash conversion: sustaining strong operating cash flows while capex remains disciplined.

How to think about position sizing: TLS can serve as an income core—fully franked dividends, visible buy‑backs—balanced by moderate growth from mobility and infrastructure. It complements higher‑growth holdings by dampening volatility and contributing reliable cash.

Why this duo works together

1. Different cycles, same compounding: TNE’s subscription software delivers structural growth with low cyclicality; TLS’s telecom cash flows deliver income with network‑driven upside. Together, they smooth portfolio volatility while building intrinsic value.
2. Capital return clarity: TNE offers progressive, fully franked dividends backed by ARR expansion and ongoing R&D reinvestment. TLS offers fully franked dividends plus buy‑backs layered over a multi‑year investment plan to lock in competitive advantages.
3. Risk balance: Execution risk for TNE lies in international scaling and maintaining best‑in‑class retention; execution risk for TLS lies in ARPU defense, competitive intensity, and sustaining margin as new network waves roll through. In combination, the risks are diversified across sectors, models, and cycles.

A practical framework for a “growth + income” sleeve

1. Core anchors: Pair a compounding SaaS leader (TNE) with a high‑quality cash generator (TLS) to create a base that grows distributions and intrinsic value.
2. Reinvestment discipline: Let TNE’s R&D and product expansion fuel ARR growth; let TLS’s targeted network capex and operational AI drive ARPU and efficiency—both self‑funded.
3. Cash flow cadence: TNE’s semi‑annual dividends grow with earnings; TLS’s fully franked dividends and buy‑backs provide regular income and per‑share uplift. Consider dividend reinvestment for TNE and partial reinvestment for TLS to balance compounding with spendable income.

Final word

If the goal is to collect reliable dividends without capping growth, TechnologyOne and Telstra offer a compelling one‑two. TNE compounds high‑quality ARR and shares the gains through steadily rising payouts. TLS converts a defensible mobile franchise into fully franked dividends and buy‑backs while investing to protect tomorrow’s cash flows. In a single sleeve, investors can own structural growth and dependable income—the best of both worlds, and a sensible foundation for an ASX portfolio built to last.

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