Is Your Mega-Dividend Safe?

Investors are skeptical about extreme dividends these days. A quick screen shows that 106 companies sport a yield of at least 10% today. Of these, only 10 have beaten the S&P 500 benchmark over the last year. For every market-beating SandRidge Mississippian Trust I (NYSE: SDT  ) and American Capital Agency (Nasdaq: AGNC  ) , there are nine underperformers like Enerplus (NYSE: ERF  ) or France Telecom (NYSE: FTE  ) .

It's not like the market-beaters are far and away higher-quality businesses than the losers. The losers all have upsides and the current winners are far from perfect.

All four of the stocks mentioned above score at least four out of five stars in our CAPS stock-grading system. The Fool has both recommended mobile operator France Telecom and bought shares of it -- and I own some, too. Fellow Fool Brian Pacampara took a look at oil and gas investment fund Enerplus to see if it was poised for a big comeback.

On the other hand, Fool Isac Simon keeps a wary eye on SandRidge's massive debt load and worries that "poor decisions taken in the past could come back to haunt management." Alex Dumortier likes mortgage REIT American Capital Agency just fine, but believes that Spanish bank Banco Santander (NYSE: STD  ) offers a far superior risk-to-reward balance.

Here's the part that might surprise you: Even though my own France Telecom holding lands on the losing side of this skepticism right now, I totally applaud investors for considering the risks in any high-yield stock.

When dividend yields soar, it's either due to remarkable payouts or collapsing share prices. In many cases, prices on high-yielding shares fall because investors worry about coming dividend cuts. Indeed, Enerplus recently moved from cash payouts to a share-based dividend and France Telecom executives were caught talking about lower payouts in 2013 -- there's a mobile price war brewing in Europe and the company may need some extra cash to weather that storm.

So go ahead and consider the risks inherent in super-rich dividends. Fantastic payouts can be overwhelmed by falling market values, particularly if the collapse is followed -- or started -- by a dividend cut.

If extreme payouts leave you shaking your head over their risky nature, you should have a look at nine rock-solid dividend stocks that can secure your retirement. These yields may be a bit lower, but so are the market risks. This special report is free for a limited time, so get your copy right now.