Broker says Santos is the best ASX 200 energy share to buy now

Don't miss out on this share if you're wanting energy exposure.

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If you're wanting to gain exposure to the energy sector, then Santos Ltd (ASX: STO) shares could be the way to do it.

That's the view of analysts at Morgans, which have named the ASX 200 energy share on their best ideas list again this month.

Why is Santos an ASX 200 energy share to buy?

According to the note, Morgans is a fan of the company due to its gross profile and diversified earnings base.

Its analysts believe this leaves the company best positioned to outperform during a sector recovery.

The broker currently has an add rating and $8.75 price target on its shares. Based on the current Santos share price of $7.57, this implies potential upside of over 15% for investors over the next 12 months.

In addition, the broker is forecasting dividends of 34.1 cents per share in FY 2023 and 46 cents per share in FY 2024. This equates to very attractive yields of 4.5% and 6.1%, respectively, for the ASX 200 energy share.

Morgans explains its bullish view as the following:

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. PNG growth meanwhile remains a riskier proposition, with the government adamant it will keep a larger share of economic rents while operator Exxon has significantly deferred growth plans across its global portfolio.

All in all, it clearly believes this could make Santos an ASX 200 energy share to buy right now if you're wanting sector exposure for your portfolio.

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. 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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