Are these the FTSE 100’s dodgiest dividend stocks?

A modest earnings recovery at Marks & Spencer (LSE: MKS) has enabled the retailer to crank its progressive dividend policy back into action in recent years.

The FTSE 100 (INDEXFTSE: UKX) company’s fashion woes have long been a millstone around its neck. But a rare sales improvement more recently — allied with soaring demand for its premium foods — encouraged ‘Marks and Sparks’ to feel confident enough to raise payouts again.

And the City expects Marks & Spencer to maintain this upward course. A reward of 18.7p per share in the year to March 2016 is expected to bound to 21p in the current period, yielding an impressive 6.6%.

But I believe investors should take this projection with a pinch of salt. A predicted 14% earnings slide in fiscal 2017 leaves the forecasted dividend covered just 1.4 times by earnings, some way below the safety benchmark of 2 times.

And latest trading numbers should stoke investor fears still further. M&S saw like-for-like sales of its clothing and homeware products slide 8.9% during April-June. And the firm’s rapid store expansion programme just prevented sales of its edible products from slipping into the red.

With the financial implications of Brexit also likely to put pressure on the broader retail landscape in the weeks and months ahead, I reckon those expecting chunky dividend growth at Marks & Spencer could end up bitterly disappointed.

Crude catastrophe?

The threat of sustained oversupply in the oil market also makes BP (LSE: BP) a mighty risk for dividend chasers, in my opinion.

The fossil fuel play has been able to keep payouts rising in recent times despite the impact of low crude values, its long-running asset-shedding programme, allied with a tighter chokehold on costs and reduced capital expenditure budgets, maintaining its position as a top pick for income investors.

The number crunchers believe that this trend could be coming to an end, however — a projected payment of 40 US cents per share matches last year’s dividend.

Still, many stock pickers will remain be drawn to a huge yield of 7%, a figure that trounces the FTSE 100 average of 3.5%.

But stock selectors should treat this projection with some caution. First of all, this year’s anticipated dividend smashes projected earnings of 17.5 cents per share. And net debt continues to surge — this galloped to $30.9bn as of June, up from $24.8bn a year ago.

There’s clearly only so far BP’s streamlining drive can go, not only to keep dividends rolling at market-busting levels, but also before it becomes seriously earnings destructive for the coming years.

Rather, the company needs a significant uptick in black gold values to retain its lustre as a top-tier dividend pick. But with the world already drowning in too much oil, and producers from Texas to Tehran showing huge reluctance to switch down the pumps, a chunky price push still appears some way off.

As a consequence, I reckon those seeking robust dividend potential in the near term and longer should shop elsewhere.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended BP. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.