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Vodafone has just slashed the payout! Could this FTSE 100 dividend stock be next?

It’s fair to say the investment community had widely been expecting Vodafone Group to hack down the dividend sooner rather than later. It’s why its share price had fallen 36% over the 12 months to Tuesday, the day on which news emerged that payouts were to be rebased.

The FTSE 100 firm slashed the full-year dividend for the fiscal year to March to 9 euro cents per share, the impact of a vastly-reduced final payment pushing the total dividend 40% lower year-on-year. But I believe Vodafone isn’t the only blue-chip business that’ll be taking the hatchet to dividends in the next few quarters.

Sales still failing

Kingfisher (LSE: KGF) is one Footsie business I’ve been tipping for a dividend cut recently as it flounders in its key markets of the UK and Ireland and France.

It was forced to lock the dividend in the 12 months to January at 10.82p per share in reflection of its enduring top-line troubles, and the number crunchers are expecting the exact same reward in the current year. However, the chances of a reduced dividend have grown even further following the DIY retailer’s latest trading details released today.

In a first-quarter update, Kingfisher’s ability to turn around its flagging fortunes has once again come under scrutiny, a 0.8% improvement in like-for-like sales at group level falling well short of consensus expectations above 1.5%. This was a particularly disappointing result given the weak comparatives of the February-April period of last year too.

Across its UK stores, like-for-like sales rose 3.4% in the three months, although Kingfisher fared much worse in France where underlying revenues dropped 3.7%. The disruption of the firm’s long-running ‘Kingfisher One’ transformation strategy on revenues, a calamitous programme that’s claimed the scalp of chief executive Véronique Laury, is yet to run out of steam. And in an environment of weak consumer spending on both sides of the English Channel this is proving particularly catastrophic.

Better dividend buys!

As I type, City analysts are expecting earnings to rebound 18% in the current year, though in the wake of Wednesday’s worrying trading numbers, expectations that Kingfisher will charge back into growth following the drops of recent years are likely to be scaled back quite spectacularly.

So what does this mean for the expected dividend? Well dividend cover currently stands at a healthy 2.2 times. But given the probability of reduced earnings forecasts, I’m basically unmoved by this figure. Indeed, I’m much more concerned by the company’s increasingly fragile balance sheet — net cash fell by almost a third in the last fiscal year to £48m — and the double whammy that increasing costs and insipid sales growth is creating.

I’d encourage investors to forget about Kingfisher’s chubby 4.6% dividend yield, then. There’s plenty of bigger yielders with stronger profits outlooks and better balance sheets to pick from today, many of which can be found on the FTSE 100 too.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.