2 quality ASX dividend shares trading at a discount

These 2 ASX dividend shares are very different from each other. Different sectors. Different drivers.

But both Santos Ltd (ASX: STO) and Sonic Healthcare Ltd (ASX: SHL) are quality companies and now sit at more compelling prices.

For investors chasing a mix of income and potential upside, the 2 ASX dividend shares could be worth a closer look.

Santos Ltd (ASX: STO)

The first ASX dividend share has found fresh momentum, climbing about 8% this year to $6.70 as oil prices rebound and investors rotate back into energy.

The story is shifting. Santos is emerging from a heavy spending phase just as major projects near completion. That timing matters.

At its core, the ASX dividend share owns long-life oil and LNG assets across Australia, Papua New Guinea, Timor-Leste, and the US. LNG under long-term contracts helps steady cash flow when spot prices swing.

Now the growth projects loom large. Barossa LNG and Alaska’s Pikka oil development are edging toward first production. If delivered on time and on budget, they should lift output, free cash flow, and earnings power. In a few years, Santos could look leaner, higher-margin, and more cash-generative.

Income adds to the appeal. The stock currently offers a dividend yield of around 5.4%, well above the broader market. Management has tightened its capital return framework, linking dividends directly to free cash flow rather than stretching the balance sheet. That’s more disciplined — but not immune to commodity cycles.

Still, if prices hold and projects deliver, Santos offers income plus upside. Consensus broker targets sit around $7.22, an 8% capital upside from here, before dividends. The team at Macquarie has an outperform rating and a 12-month price target of $7.77, which would be a 16% return from the current share price.

Sonic Healthcare Ltd (ASX: SHL)

This ASX dividend stock isn’t the flashy growth name stealing headlines. Sonic Healthcare is the steady compounder. The ASX dividend share that keeps delivering.

This is a defensive business by design. When the economy slows, people still need blood tests, biopsies, and scans. Diagnostic demand is essential, recurring, and far less sensitive to consumer confidence than most sectors.

The ASX dividend share’s pathology and imaging network stretches across Australia, Europe, the US, and the UK. That global footprint gives it multiple earnings engines and a natural hedge if one region softens. Few ASX healthcare shares can match that diversification.

The structural tailwinds are hard to ignore. Ageing populations and the shift toward preventative healthcare mean more testing, not less. Higher volumes support steady cash flow, while management’s disciplined acquisition strategy has added scale without blowing out margins.

Then there’s the dividend.

The $10 billion ASX dividend share pays shareholders twice a year and has a long history of maintaining — and gradually increasing — payouts. Bell Potter expects partially franked dividends of 109 cents per share in FY26 and 111 cents in FY27.

At a recent share price of $21.20, that implies yields of roughly 5.1% and 5.2%. Brokers are cautiously optimistic, with an average 12-month price target of $25.65, suggesting a potential upside of 21%.

Analysts at Bell Potter have a buy rating and a $28.50 price target on its shares. This suggests a 34% upside.

The post 2 quality ASX dividend shares trading at a discount appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. 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 Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.