The FTSE 100 is expected to yield an average 4 per cent this year, according to analyst consensus forecasts, yet dividend coverage is also expected to be 1.5 times on average. This is some way below the comfort threshold of 2 times coverage. However, there is some good news - this is up from an average dividend coverage ratio of 1.4 times last year.
Such low dividend coverage is unsurprising given that financial services and oil and gas companies are expected to be the biggest dividend payers this year. Companies in these sectors are forecast to account for around 22 per cent and 19 per cent of total FTSE 100 dividends payed, respectively.
