Income investors love dividend stocks -- stocks bought less with an eye to their price (value stocks) or their growth prospects (growth stocks), and more because of the size of their dividend checks. But here's the thing: Some stocks pay out too much money as dividends.

Generosity may be a virtue, but when a stock pays out more money in dividends (dividend yield) than it earns as profits (a relationship known as the payout ratio), that's being generous to a fault. It's a practice that could prove unsustainable, and if it leads to the company cutting its dividend it could leave investors in the lurch.

Scissors cutting dollar bill

Image source: Getty Images.

That's the danger faced by investors in Guess? (NYSE:GES), Tailored Brands (NYSE:TLRD), and H&E Equipment Services  (NASDAQ:HEES).

Stock

Yield

Dividend Per Share

Earnings Per Share

Guess?

7.7%

$0.90

$0.31

Tailored Brands

6.4%

$0.72

$0.52

H&E Equipment Services

5.8%

$1.10

$1.04

Data source: S&P Global Market Intelligence.

Guess whose dividend is at risk?

Apparel maker Guess? designs and distributes everything from jeans to shirts to "intimate apparel." It also "distributes" $0.90 per share in dividends to its investors every year, a dividend it has held steady for the past three years. But here's the thing: while it's held its dividend constant, over the past three years Guess' sales have declined by 14%, and its profits have plunged 85%.

As time goes on, Guess earns less and less money with which to pay its dividend, forcing the company to raid its cash reserves to make up the difference. Since 2014, Guess' cash balance has declined by $192 million, and its long-term debt has climbed from almost nothing to more than $23 million. Although Guess still has money in the bank (more than $316 million at the end of last quarter), and the situation is not yet critical, things can't continue going this way forever. With free cash flow having finally turned negative last year, Guess is at a crossroads.

My guess: The company cuts its dividend sooner rather than later.

Tailor-made for a dividend cut

The situation is somewhat similar at suits-specialist Tailored Brands, the company formerly known as Men's Wearhouse, which has held its dividend steady at $0.72 per share since back in 2013. Unlike Guess, Tailored Brands kept its sales rising through 2016, and they've only recently faltered. Profits, however, peaked at $132 million in 2013 (the same year the dividend was first raised to $0.72) -- and haven't returned to that level since.

Tailored Brands recorded a more than $1 billion loss in 2016, largely due to asset writedowns and goodwill impairments. Happily, Tailored Brands is back in the black today. But having earned only $25 million on $3.4 billion in sales last year (less than a 1% profit margin), profits still aren't anything to brag about -- and they're nowhere near robust enough to pay for the company's generous 6.4% dividend yield.

On its balance sheet, Tailored Brands is showing a modest $67 million in cash -- but debt has ballooned to $1.6 billion, three times the stock's own market capitalization. Sooner or later, Tailored Brands must address this debt issue. When push comes to shove, I expect the dividend will fall on the cutting board.

Switching gears

For a change of pace, our final at-risk dividend stock today is H&E Equipment Services. Unlike the other companies on today's list, H&E doesn't do apparel. Rather, its business is the sale, rental, and servicing of aerial work platforms, cranes, and similar heavy industrial equipment. In other respects, however, H&E faces much the same problems plaguing the other companies we've discussed so far.

Sales have been sliding at H&E for the past two years, down 10% from 2014, and profits have come tumbling after -- down 32.5%. Last year, H&E's earnings dropped to just $1.05 per share, which might have been OK in 2014, when the company paid out $1.05 per share in dividends. But last year, H&E hiked its dividend by a nickel, to a new dividend payout of $1.10 per share. As a result, H&E isn't earning enough to pay its dividend anymore.

This is not a good situation to be in, either, because H&E's balance sheet is in somewhat dire straits today. Cash reserves are a mere $5 million, while the company carries $817 million in long-term debt (which is more than its own market cap). If earnings continue to decline (and analysts think they will), the only way H&E will be able to maintain its dividend at its current level will be to take on more debt -- not an impossible scenario, but certainly suboptimal for the long-term health of the company.

That makes H&E my third and final candidate for an apparently good "dividend stock" that could soon cease to be so.

Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Guess?. The Motley Fool has a disclosure policy.