Should you buy 6%+ yielders BP plc, SSE plc and Pearson plc?

BP petrol station

Today I am discussing the dividend outlook of three of the FTSE 100's giant yielders.

Publisher in peril

Despite severe earnings volatility in recent years, publishing group Pearson(LSE: PSON) has remained a reliable pick for those seeking dividend growth year after year.

But if City forecasts are to be believed, this trend could be coming to a halt. For 2016 Pearson is expected to pay a dividend of 50p per share, only matching the reward shelled out last year. And while many dividend chasers will be drawn in by the 6.5% yield, I believe investors should exercise some caution.

Pearson continues to face challenging conditions in its key US and UK markets as cyclical and policy-connected matters weigh. As a result the abacus-bashers expect earnings to tank to just 53.3p in 2016, leaving the predicted dividend barely covered.

And with Pearson also battling a rising debt pile as restructuring costs weigh -- these are expected to clock in at £320m in 2016 alone -- I believe dividends could find themselves on the chopping block in the near future.

Powering down

I have long argued that the earnings -- and consequently -- dividend picture over at SSE(LSE: SSE) is becoming ever-cloudier, as the rise of the independent suppliers accelerates.

SSE advised last month that it expects earnings for the 12 months to March 2016 to clock in at 117p-119p per share, down from 124.1p per share last year. However, the power play pledged to "increase in the full-year dividend... at least equal to RPI inflation," assuaging investor concerns that its progressive policy could be about to expire.

The City is in agreement with this forecast, and has pencilled in a full-year reward of 90.1p, yielding a terrific 6%.

While SSE may have the meat to meet this year's forecasts, I believe the firm's long-term dividend outlook is much murkier. A double-whammy of increased competition and hulking capex costs are likely to keep denting the bottom line, while £8.5bn worth of net debt and hybrid capital as of March could also significantly constrain dividend expansion this year and beyond.

Crude concerns

Likewise, a poorly revenues picture is also putting the payout picture over at BP(LSE: BP) under intense stress, in my opinion.

The nerves of many a concerned investor were eased somewhat by the oil giant's decision to freeze the first-quarter dividend at 10 US cents per share. And the number crunchers expect the full-year dividend to remain on hold from 2015 levels, a predicted 40-cent reward yielding a terrific 7.2%.

However, I believe such predictions are a work of fantasy. Firstly, the predicted dividend overshoots anticipated earnings of 16.8 US cents per share by some distance. And BP's wafer-thin balance sheet is unlikely to come to the rescue should the bottom line sink -- net debt surged to $30bn as of March from $25.1bn a year earlier.

And the yawning imbalance washing over the crude market threatens to put the kibosh on plentiful payments further out, too. Sure, Brent prices may continue to bubble just below the $50 per barrel marker. But this recovery appears to be have been built on frothy speculative buying rather than a sign of improving supply/demand dynamics.

So with global inventories continuing to surge -- US stockpiles hit a fresh record of 543.4 million barrels last week -- and orchestrated production cuts still failing to materialise, I expect earnings at the likes of BP to keep on dragging, which is a worrying prospect for income chasers.

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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.

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