Dividend stocks are almost always in high demand. Companies that can afford to pay investors a quarterly cut of their profits tend to perform better than non-dividend-paying stocks overall, and are also more reliable in times of recession.

However, not all dividend stocks are created equal. Some have earned the title of Dividend Aristocrat for raising their dividend payouts annually for more than 25 years while others fall into the category of yield traps. These are stocks that offer high dividend yields because they are cheap, but that also puts them at risk of a dividend cut. Some stocks, however, may be in the middle. They're cheap but can sustain generous dividend payments.

Below are three dirt-cheap dividend stocks that offer sky-high yields.

One man handing a $100 bill to another man.

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1. Macy's 

The venerable department store chain needs little introduction. The company dates back to the 1800s, but in the e-commerce era it's been faced with new challenges. Customers can now order much of the clothing, home goods, and other merchandise that they used to come to Macy's (M -0.49%) for online. As a result, comparable sales have steadily fallen and the company has been forced to close stores. It recently announced that it would close 125 underperforming locations over the next three years. 

However, Macy's remains solidly profitable and has a bevy of valuable real estate that it is slowly unlocking, which gives investors good reason to believe that its dividend, currently yielding 9.3%, is sustainable. Macy's currently pays $1.51 per share in dividends annually and is on track to make a profit of $2.57 to $2.77 per share in fiscal 2019, with $0.37 of that coming from asset sale gains. 

As part of the turnaround plan it recently announced, the company expects adjusted EPS of $2.45-$2.65 in 2020 and $2.50-$3.00 in 2022. That guidance assumes that Macy's new strategic plan delivers the results, but for now the dividend payout has a wide margin of safety as the payout ratio is only around 60%.

2. Ford

The automaker, perhaps best known for its popular F-series pickup trucks, has struggled for years with challenges in Europe, South America, and now China. Meanwhile, investors have largely abandoned legacy automaker stocks like Ford (F -3.92%) and General Motors in favor of tech-focused growth stories like Tesla and Uber.  

In its most recent earnings report, Ford's challenges came into focus again as the company lost $1.7 billion in the fourth quarter on a generally accepted accounting principles (GAAP) basis due to a $2.2 billion loss related to its pension and retirement benefits. Adjusting for that, the company had a $500 million profit before interest and taxes, but it lost market share and revenue declined. Its forecast for 2020 was uninspiring. 

For the year ahead, it expects adjusted earnings per share between $0.94 and $1.20, which compares to $1.19 in 2019. Ford also said it would continue to pay a dividend of $0.15 a share each quarter, giving investors today a dividend yield of 7.6% as the stock now trades at less than $8. Even at that yield, Ford's dividend looks adequately funded. While the stock may continue to struggle over the next year, the dividend looks safe.

3. AMC Entertainment

Though box office tickets sold at movie theaters peaked in 2002, ticket sales have continued grow thanks to higher prices. Nonetheless, AMC Entertainment (AMC -1.76%), the world's largest movie theater operator, has seen its stock wither with shares down 76% over the last three years. That's made AMC one of the highest-yielding stocks on the market, with a dividend that currently pays a 10.7% yield.

While AMC does generate an operating profit, the company pays significant interest expense due to holding nearly $5 billion in debt, which it took on to expand and acquire peers like Carmike Cinemas and Odeon in Europe. 

Through the first three quarters of 2019, the company brought in $92.6 million in operating income but paid more than $250 million in interest expense. As a result, it lost $135.6 million in that period, or $1.31 per share, on a GAAP basis. 

The company uses a figure it calls adjusted free cash flow, which excludes capital expenditures related to growth initiatives, that makes it look like the dividend is more sustainable than it is as it made $55.4 million in adjusted free cash flow through the first three quarters. Still, growth spending is spending, and those are dollars that can't be paid out to investors. Unlike Macy's or Ford, AMC is not able to fund its dividend out of GAAP profits or even free cash flow as it's usually measured. The dividend does not look sustainable unless something changes at the company to help reduce its debt burden and suffocating interest payments.