These 2 ASX dividend shares have been under some pressure in the past 6 months. Energy giant Santos Ltd (ASX: STO) has lost 18% of its value, while Metcash Ltd (ASX: MTS) has tumbled more than 15%.
At current lower prices, these reliable ASX dividend shares may deserve a closer look.
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Santos
Let's start with the biggest name of the two. The price of this ASX dividend share has been volatile, sentiment has swung back and forth, and energy markets have kept everyone guessing.
But look past the noise, and a different picture emerges.
Santos is entering a critical growth and cash-flow phase. After years of heavy capital spending, the company is finally on the verge of reaping the rewards. Last Thursday, the ASX dividend stock revealed sales revenue for the fourth quarter was $1.2 billion. That's a gain of 9% on the prior quarter, bringing the full-year result to more than $4.9 billion.
Santos' real edge lies in its scale and high-quality asset base. The $20 billion ASX share owns long-life LNG and gas assets across Australia and Papua New Guinea, giving it a durable production platform.
Even better, major growth projects — including Barossa and Pikka — are nearing completion and are expected to materially lift output over the coming years. As these projects transition from construction to production, Santos should see a sharp uplift in free cash flow.
On Thursday, Santos showed early signs of that, with cash flow being up 30% on the prior quarter to about $380 million. This also brought cash flow for the full year to about $1.8 billion.
That's a big deal. Stronger cash generation gives management more flexibility to repair the balance sheet, reduce debt, and return more capital to shareholders.
That's great news for income investors. The ASX dividend share runs a flexible, cash-flow-linked dividend policy. It returns a significant portion of free cash flow when conditions allow rather than locking itself into an unsustainable payout. That can mean dividends fluctuate year to year, but at current prices, the forecast yield of 5.67% looks compelling.
Brokers appear to agree. Most analysts rate Santos a buy, with an average 12-month price target of $7.24. From the current share price of $6.46, that implies around 12% upside — before dividends are even counted.
Metcash
This ASX dividend share isn't the kind of stock that sets your group chat on fire. But what it does offer is something many investors quietly crave: reliable income from a rock-solid business .
Metcash is the backbone behind IGA supermarkets, Mitre 10, Home Timber & Hardware, plus a huge network of independent liquor and foodservice retailers. In other words, this ASX dividend share sits right in the middle of everyday essentials — food, hardware, and booze. The kind of stuff people keep buying even when budgets tighten.
Sure, competition is fierce, and margins are always under pressure. And no, this isn't a dividend stock you buy expecting explosive growth.
Metcash has earned a reputation as a dependable dividend payer, and with the share price still sitting at fairly modest levels, the 5.4% yield looks especially attractive right now.
Better still, UBS expects the company to lift its dividend every year from FY25 through to FY29. For passive income investors, that's exactly the kind of forecast you want to see. In early December, Metcash confirmed its latest dividend will be 8.5 cents per share and will be fully franked.
Most analysts see moderate to strong upside for the ASX dividend share, with the average 12-month price target sitting at $3.97. That implies a potential 19.5% share price gain from current levels.
Add dividends to the mix, and total returns could approach 25% over the next year.
