Morgans names the best ASX 200 dividend shares to buy in April

The good news for income investors is that there are a large number of quality ASX 200 dividend shares to choose from on the Australian share market.

Two that have been tipped as best buys by analysts at Morgans in April are listed below. Here’s what the broker is saying about them:

Santos Ltd (ASX: STO)

The first ASX 200 dividend share that Morgans has on its best ideas list is energy producer Santos. The broker currently has an add rating and $8.60 price target on its shares.

It believes Santos is a great option due to its growth potential and diversified earnings. The broker explained:

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.

Morgans is expecting this to underpin dividends per share of 28.4 US cents in FY 2023 and 29.9 US cents in FY 2024. Based on the current Santos share price of $7.18, this will mean yields of 5.8% and 6.15%, respectively.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that Morgans has on its best ideas list this month is Australia’s oldest bank, Westpac. It has an add rating and $25.80 price target on its shares.

Morgans feels that Westpac is well-placed to deliver the best return on equity improvement in the sector and appears to believe this could underpin some big dividends in the coming years. It commented:

We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.

The broker is forecasting fully franked dividends per share of $1.53 per share in FY 2023 and $1.59 per share in FY 2024. Based on the current Westpac share price of $21.74, this will mean yields of 7% and 7.3%, respectively.

The post Morgans names the best ASX 200 dividend shares to buy in April appeared first on The Motley Fool Australia.

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• ‘Strong demand’: The 2 ASX 200 shares to pounce on right now
• 3 Warren Buffett tips on how to invest in ASX 200 banks

Motley Fool contributor James Mickleboro has positions in Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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