Here's the latest FTSE 100 dividend forecast, and it's growing

It's been a while since I heard this boom about the UK stock market dividend forecast.

The latest Dividend Dashboardfrom AJ Bellreflects analyst consensus for a 1% cash dividend increase this year. And there is a further 7% increase penciled in for 2025, to reach £83.9bn.

That would not have taken us to the all-time record of £85.2bn for 2018. But we can only miss by a whisker.

Over the past few years, analysts have started with high hopes and scaled them back a bit as the months passed, however. But even so, I still have hope.

Buyback boost

A quick look at the first few days of this week alone shows a lot FTSE 100 companies involved in share buybacks.

Barclays again HSBC Holdings share price, BP again A shell, BAE Systems, Tesco, Prudential… they all do. It's not just a few fields, it goes over everything.

If such diverse firms want to buy their shares at today's prices, it makes me want to join.

And buybacks should increase future earnings per share.

A dangerous high yield?

Let's look at one of the biggest fruits.

Savings and investment manager IM&G (LSE: MNG) paid a 9.7% dividend yield to 2024.

That is not guaranteed, as no refund can be. But we are nearing the end of the year, there are no obvious problems so far. And that raises my hopes.

With such a large yield, I tend to be cautious. Will there be enough money to pay for it? What does the next few years look like? Have we had cuts in recent years, and does the futures look a little weaker?

Those things did not go well Vodafoneis set to cut its 2025 dividend in half. For many years, it was not profitable to give me hope for its large shares. And that eventually comes back to bite.

A vision of the future

I haven't decided if I will buy the M&G. But the forecast earnings look comfortable ahead of earnings, with a cover of around 1.35 times. For this type of company, which doesn't spend a lot of money, I think it's okay.

There have been no dividend cuts in the last decade, and I see no reason to fear one in the next few years.

There is some risk, as M&G is coming out of a difficult situation where people are withdrawing from their use of investment services. We are not out of those woods yet. And inflation is still a concern, keeping people's hands very firmly in their pockets.

But across the FTSE 100, I see the same rising wages. The cover is a little thin in some cases, but generally seems solid to me.

As a general warning, i Dividend Dashboard reveals that there have been 137 dividend cuts from today's FTSE 100 stocks over the past decade. Of those, 74 were in 2019 and 2020 (and some, like banks, returned quickly).

Dividend investing is not a risk-free strategy. But right now, I think the potential reward-to-risk ratio from FTSE 100 shares may be the best I've seen in a long time.