There are a lot of ASX 200 dividend shares to choose from on the local share market.
To narrow things down for income investors, let's take a look at two that have been given the thumbs up by analysts at Ord Minnett.
Let's see what the broker is saying about these ASX 200 dividend shares and what sort of dividend yields could be on offer with them:
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Medibank Private Ltd (ASX: MPL)
The first ASX dividend 200 share that could be a buy is Medibank. It is one of Australia's leading private health insurance providers.
Ord Minnett is positive on the company and has an accumulate rating and $4.25 price target on its shares.
It was pleased with Medibank's performance in FY 2024, highlighting that it delivered a net profit that was ahead of consensus expectations. And while its policyholder growth was lower than expected, Ord Minnett feels this was more than offset by a positive business mix and a higher gross margin.
Combined with its defensive qualities and undemanding valuation, the broker feels Medibank would be a good option for income investors. It said:
With low growth expected and an undemanding P/E ratio, we view Medibank as a defensive stock that investors should own. We maintain ouœr Accumulate recommendation, but lift price target to $4.25 from $4.15, reflecting higher earnings expectations.
As for dividends, Ord Minnett is forecasting fully franked dividends per share of 17.5 cents in FY 2025 and then 17.8 cents in FY 2026. Based on its current share price of $3.69, this will mean dividend yields of 4.7% and 4.8%, respectively.
Santos Ltd (ASX: STO)
Another ASX 200 dividend share that could be a buy according to Ord Minnett is Santos. It is one of the largest energy producers in Australia.
Ord Minnett currently has a buy rating and $8.40 price target on the energy giant's shares.
It likes Santos largely due to its positive free cash flow (FCF) outlook, which is being underpinned by its Pikka and Barossa LNG operations. It believes this positions the company to return funds to shareholders in the near future. The broker explains:
An estimated FCF yield of 20% once Pikka and Barossa LNG start producing, and rigorous control of how that extra cash is spent, implies to us that Santos will have plenty of room to return excess capital to shareholders either via an increased payout ratio or share buybacks. In our view, the medium-term prospects for Santos offer a compelling investment opportunity.
In respect to dividends, Ord Minnett is forecasting dividends per share of 41 cents in FY 2024 and then 44 cents in FY 2025. Based on the current Santos share price, this will mean dividend yields of 5.7% and 6.1%, respectively.
