These 2 ASX shares both have lost some serious ground over 6 months. The share price of Santos Ltd (ASX: STO) and Sonic Healthcare Ltd (ASX: SHL) respectively tumbled 22% and 18%.
Here are two very different ASX shares that tick both the potential growth and income boxes — one cyclical, one defensive. Let's check them out.
Santos Ltd (ASX: STO)
Let's start with the larger ASX 200 share, Santos – market capitalisation $20 billion – has had a bumpy run. But beneath the volatility sits a business entering a crucial growth phase.
The oil and gas producer has spent years pouring capital into major projects, and those investments are now close to paying off. The ASX 200 share's biggest strength is scale and asset quality.
Santos controls long-life LNG and gas assets across Australia and Papua New Guinea, with new developments such as Barossa and Pikka set to materially lift production over the next few years.
As these projects move from build to cash-generation mode, free cash flow is expected to improve sharply. That opens the door to both higher shareholder returns and balance-sheet repair.
The flip side is commodity exposure. Santos' earnings and share price remain tightly linked to oil and gas prices, which can turn quickly. Project execution risk also lingers, especially given regulatory scrutiny and cost pressures across the energy sector.
On dividends, Santos operates a flexible, cash-flow-linked policy. Management has committed to returning a large portion of free cash flow to shareholders as conditions allow, rather than locking in a fixed payout.
That approach can lead to uneven dividends year to year, but at current prices the yield of 5.96% remains attractive. If energy prices hold and new projects deliver as planned, there's scope for both rising dividends and a share price recovery.
Brokers are backing Santos' income and growth outlook. Most analysts rate the ASX energy share a buy, with an average 12-month price target of $7.33. That is 21% upside from the current $6.06 share price.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare offers a very different proposition: steady earnings, defensive characteristics, and dependable dividends. The ASX diagnostics share operates pathology and imaging businesses across Australia, Europe, the US and the UK, giving it geographic and revenue diversification few ASX healthcare peers can match.
Its core strength is resilience. Demand for medical testing doesn't disappear in economic downturns, and long-term drivers such as ageing populations and preventative healthcare support steady volume growth. Sonic has also grown through disciplined acquisitions, adding scale while protecting margins.
However, this is not a fast-growth stock. Cost inflation, labour shortages and periodic integration issues can weigh on earnings momentum. The market also tends to lose patience when growth slows, which can cap near-term share price performance.
Sonic's dividend policy is shareholder-friendly and predictable. It pays dividends twice a year and has a long track record of maintaining or gradually increasing payouts. The dividend yield is solid for a healthcare stock, 5.05% at current levels. It's supported by recurring cash flows rather than one-off windfalls.
For investors, the ASX 200 share offers modest growth potential alongside income stability. Bell Potter has initiated coverage with a buy rating and a $33.30 price target, implying 30% upside from the current $23.33 share price.
This is more bullish than the market consensus target of $26.04, almost 12% upside. Including a forecast 5% dividend yield, total returns could be well over 15%.
