There are plenty of options in the resources sector for investors to choose from.
Two that could offer a combination of income and capital gains are listed below.
Here's why analysts at Morgans are tipping them as top buys:
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Mineral Resources Ltd (ASX: MIN)
The first ASX 200 resources share to consider buying is Mineral Resources. It is a mining and mining services company with exposure to energy, iron ore, and lithium.
Morgans believes the company is well-placed to benefit from China's reopening and feels its valuation is very attractive. It said:
MIN is a founder-led business and top tier miner and crusher that has grown consistently despite barely issuing a share over the last decade. Also helping our investment view is that MIN's diversification leaves it far more capable of tolerating volatility in lithium markets than its peers in the sector. We see MIN's lithium / iron ore market exposures as an ideal combination to benefit from the China re-opening increase in demand during 1H'CY23. We also see MIN as well placed to grow into its valuation, even if we see unexpected metal price volatility, given the magnitude of organic growth in the pipeline.
The broker currently has an add rating and $103.00 price target on its shares. This compares favourably to the latest Mineral Resources share price of $69.59. In addition, its analysts are forecasting fully franked dividends per share of $2.72 in FY 2023 and then $5.79 in FY 2024. This will mean yields of 3.9% and 8.3%, respectively.
Santos Ltd (ASX: STO)
Another ASX 200 resources share that the broker is bullish on is Santos. Following its recent merger with Oil Search, it is one of the region's largest energy producers. Morgans likes the company due to its diversified earnings and exposure to the sector recovery. It explains:
The resilience of STO's growth profile and diversified earnings base see it well placed to outperform against the backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa's development. PNG growth meanwhile remains a riskier proposition, with the government adamant it will keep a larger share of economic rents while operator Exxon has significantly deferred growth plans across its global portfolio.
The broker currently has an add rating and $8.75 price target on its shares. This compares to the current Santos share price of $7.48.
As for dividends, Morgans expects dividends per share of approximately 34 cents in FY 2023 and then 46 cents in FY 2024. This equates to yields of 4.5% and 6.15%, respectively.
