My Foolish colleague Ilan Moscovitz recently tapped into the collective wisdom of the Motley Fool CAPS investment community to dig up five dividend dynamos. As he cautioned at the time, even though most of the stock market's gains come from dividends, high yields aren't all gumdrops and rainbows. Shareholders of dividend-cutters Citigroup (NYSE:C) and Ambac Financial (NYSE:ABK) certainly understand that it's also important to make sure a company is healthy enough to support a large dividend if one is to avoid the next dividend implosion.

With that in mind, I used our new CAPS screening tool to pick out some high dividend payers it might be best to avoid. Below areĀ five companies with dividend yields above 3%.

They also have:

  • Market caps greater than $5 billion.
  • One- or two-star ratings from our CAPS community.

Remember, in the first year for which we have data, one-star companies in CAPS flamed out with an average loss of 17%. Two-star companies also underperformed.

Company

Share Price

Sector

Market Cap
(in billions)

Bank of America (NYSE:BAC)

$22.36

Financial

$99.5

General Motors (NYSE:GM)

$9.69

Consumer Goods

$5.5

Lehman Brothers (NYSE:LEH)

$17.30

Financial

$9.6

Merrill Lynch (NYSE:MER)

$28.71

Financial

$28.2

Wachovia (NYSE:WB)

$13.13

Financial

$28.4

Data from Motley Fool CAPS and Yahoo! Finance as of June 10.

Are these dividend duds? Or are they simply misunderstood? Come and join us on Motley Fool CAPS to let us know what you think. Our 110,000-strong (and counting) CAPS community wants to hear your opinion.

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