Invest in These 2 ASX Dividend Stocks for Income and Growth
Investors seeking reliable income and growth may want to consider two notable ASX dividend stocks: Santos Ltd (ASX: STO) and Metcash Ltd (ASX: MTS). Both companies have shown resilience despite recent market pressures. Here we explore their potential for income and growth.
Santos Ltd: A Growth-Focused Energy Giant
Santos Ltd has recently experienced an 18% decline in its stock value. However, this Australian energy company is transitioning into a significant growth period. With a robust asset portfolio, Santos is set to enhance its cash flow and production capabilities.
- Sales Revenue: For the fourth quarter, Santos reported sales revenue of $1.2 billion, marking a 9% increase from the previous quarter.
- Annual Revenue: Full-year sales exceeded $4.9 billion.
- Cash Flow Growth: The latest cash flow rose by 30% to approximately $380 million, resulting in a total annual cash flow of about $1.8 billion.
Santos operates a flexible, cash-flow-linked dividend policy, which allows for variable dividends based on financial conditions. Currently, the forecasted dividend yield stands at an appealing 5.67%. Analysts remain optimistic, with a majority recommending a buy rating and an average 12-month price target of $7.24, indicating approximately 12% upside potential.
Metcash Ltd: A Reliable Income Provider
Metcash Ltd, while not as glamorous, provides dependable income through its established network. This company is behind popular brands like IGA supermarkets and Mitre 10, making it a fixture in everyday essentials.
- Dividend Yield: Metcash currently offers a yield of 5.4%, which is attractive compared to other stocks.
- Future Dividend Growth: UBS forecasts annual dividend increases from FY25 to FY29.
- Recent Dividend Announcement: The latest declared dividend is 8.5 cents per share, fully franked.
Analysts predict moderate to strong price increases for Metcash, with a 12-month price target of $3.97, suggesting a potential 19.5% rise from current levels. When factoring in dividends, total returns could reach approximately 25% within a year.
Conclusion
Both Santos Ltd and Metcash Ltd present compelling opportunities for investors interested in ASX dividend stocks. Santos offers growth potential, while Metcash provides consistent income. Assessing their fundamentals can lead to advantageous investment decisions.
