Should I buy the dip on Santos shares?

Is now a good time to buy Santos shares for future dividends?

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published April 3, 2025 1:20 pm AEDT

Santos Ltd (ASX: STO) shares are in retreat today.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $6.74. In early afternoon trade on Thursday, shares are changing hands for $6.60 apiece, down 2.1%.

For some context, the ASX 200 is down 1.3% at this same time, with investors favouring their sell buttons following the latest Trump tariff news.

With Santos shares now back in the red for 2025, down 2.5% year to date, is now a good time to buy the ASX 200 oil and gas company?

Here's what these experts are saying.

Workers inspecting a gas pipeline. — Image source: Getty Images

Are Santos shares a good buy right now?

While Seneca Financial Solutions' Arthur Garipoli holds a positive medium-term view on Santos, he's not ready to pull the trigger just yet (courtesy of The Bull).

"This big market capitalisation oil and gas producer was sold down on marginally weaker than expected net profit after tax in full year 2024 and negative sentiment towards oil and gas stocks," Said Garipoli, who has a hold recommendation on Santos shares.

According to Garipoli:

The company offers an attractive production growth outlook, a superior cash flow profile and disciplined approach to capital allocation, with a view to maximising shareholder returns.

With its two major projects, Barossa LNG and Pikka Phase 1 Oil in Alaska, largely de-risked and nearing completion, the company is on the cusp of generating free cash flows from late 2025, which should increase shareholder returns.

Goldman Sachs, on the other hand, is recommending Santos as a buy.

Following on Santos' half-year results, the broker noted in February, "Delivering Barossa & Pikka to schedule and budget over the next year remain key considerations to drive STO earnings and support standout returns from 2026, both reported as on track with the latest guidance."

Goldman has a $7.90 price target on Santos shares. That represents a potential upside of almost 20% from current levels.

The broker cited Santos' "attractive valuation" and "strong near-term production growth" as reasons for its bullish rating.

Atop potential share price gains, Santos stock is also popular among passive income investors for its appealing dividend yield.

Over the past 12 months, Santos has paid out 35.4 cents a share in unfranked dividends. At the current price, Santos stock has an unfranked trailing dividend yield of 5.4%.

And Goldman Sachs expects this yield will move higher over the next few years.

According to the broker, Sanots shares offer "attractive returns averaging 6% dividend yield over the next three years".

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