Dividend Aristocrats -- companies that have raised their dividends for at least 25 consecutive years -- aren't guaranteed to be good investments. Here's why those looking to buy reliable dividend stocks should avoid Wal-Mart (NYSE:WMT), AT&T (NYSE:T), and Target (NYSE:TGT).

Disrupted by Amazon.com 

Beth McKenna (Wal-Mart Stores): The world's largest retailer might be a Dividend Aristocrat, but it's long been fluctuating between being a total-return commoner and peasant. Wal-Mart's dividend -- which it's increased every year since 1974 and is currently yielding 2.9% -- is the only attractive thing about Wal-Mart's stock. The stock has underperformed the S&P 500 for the last year, five years, and 10 years. In fact, you'd have to go back 19 years for the stock's total return (stock-price appreciation plus dividends) to come out ahead of the broader market.  

Checkout lines inside a Wal-Mart store.

Image source: Wal-Mart.

The reason behind Wal-Mart's faded star boils down to one word: Amazon.com. The e-commerce/tech giant has been eating Wal-Mart's lunch. Consumers have been increasingly embracing online shopping -- and, specifically, online shopping on Amazon's website. That last phrase is key to my rebuff to the argument that's been spewed for a good number of years that Wal-Mart has "much potential" in e-commerce. There is simply no reason for the bulk of the massive number of folks -- and I'm one of them -- who regularly shop online at Amazon to even give Wal-Mart's site a spin. Why fix what's not broken? Moreover, why mess with something that works well? Amazon has an unbeatable product selection, competitive prices, and an attractive loyalty program (Prime). 

For the first nine months of fiscal year 2017, Wal-Mart's year-over-year revenue inched up 0.7%, operating income declined 5.2%, and earnings per share on the basis of generally accepted accounting principles (GAAP) rose 1%. For the full year (Wal-Mart is scheduled to report Q4 earnings on Feb. 21), analysts expect revenue to inch up 0.8% and adjusted EPS -- which is the key earnings metric since it compares like to like -- to decline 5.9%.

Bold and risky moves

Tim Green (AT&T): With the U.S. smartphone market essentially saturated, the major wireless carriers must now compete fiercely to grow their subscriber base. A disruptive T-Mobile has led both Verizon and AT&T to reintroduce unlimited plans in an effort to avoid market share losses, and the end of two-year contracts makes switching between carriers easier than ever.

AT&T has been making big moves in an effort to diversify, closing the $49 billion acquisition of DirecTV in 2015 and announcing the $85 billion acquisition of Time Warner late last year. The Time Warner deal has yet to close, but it's clear that AT&T is willing to spend heavily on content as it aims to reinvigorate growth.

The company produced $2.84 in adjusted EPS in 2016, putting the payout ratio at a high 69% based on the most recent dividend payment. Long-term debt has exploded over the past few years, growing from $66 billion at the end of 2012 to $114 billion at the end of 2016. With the price tag for the Time Warner deal split between cash and stock, debt will only rise going forward.

AT&T is making massive bets as it aims to transform into a more broadly diversified company. The dividend is already growing slowly, and any major misstep could put further dividend increases at risk. There's a lot that can go wrong for AT&T, and I'll be staying away for that reason.

You need more than just a dividend 

Rich Duprey (Target): Later this month, Target is set to report its fourth-quarter and full-year earnings results. It's also expected to raise its dividend for the 50th consecutive time, an achievement few Dividend Aristocrats can claim, let alone regular income-paying stocks. But as great as this mass merchandiser's track record has been, at some point there needs to be more.

Target's actual business of selling goods is ailing. As with Wal-Mart, Target's long-term success has been upended by the arrival of e-commerce and Amazon. But worse for Target, it ignored the threat for a long time, too long perhaps, and though it has been playing catch-up ever since, it's not gaining much ground.

Last month, the retailer warned it suffered a poor Christmas shopping season, with comparable-store sales falling 3% as customer traffic dropped 2%. Although it did log gains in its online channel with digital sales growing more than 30%, it was only able to do so at the expense of profits because of "a highly promotional competitive environment." Essentially, it had to sharply discount everything to get customers to buy.

As a result, it forecasts earnings will be only $1.45 to $1.55 per share compared to its previous outlook of $1.55 to $1.75 per share. Comps expectations also worsened for the period with management expecting them to fall as much as 1.5% versus prior guidance that said they could rise as high as 1%.

Ominously, Target is abandoning its innovation initiatives because of declining sales, including its e-commerce start-up Goldfish that it started just last year as well as a robot store of the future that was expected to begin being built. The retailer says it needs to "refocus our efforts on supporting our core business," and when a company is stumbling, that's probably a good choice, but it should still give investors pause about where Target's future growth is going to come from.

According to Morningstar, Target's total return falls well short of the S&P 500 over every major time period going back at least 15 years, and even lags its peers in the discount store category. With a current dividend of $2.40 per share, Target's dividend yields 3.6%. That may seem comforting to income investors, but it's clear that if they pull back the lens a little more, they'll find that a better bargain exists elsewhere.