Dividend stocks are hot as ever these days. In the wake of market volatility earlier this year, investors have turned to income-paying, defensive stocks. 42 stocks on the S&P 500 had hit all time highs at the end of March, the highest total over a year. Among them were several household names, including classic dividend stocks like McDonald's CorporationThe Coca-Cola CoThe Home Depot, and Philip Morris International.

However, not all dividend stocks are smart bets. 

In today's shaky market, a number of stocks are at risk of slashing their dividends or scuttling them altogether. Let's take a look at a few of these companies below.

1. Staples (NASDAQ:SPLS)
The office-supplies retailer has fallen on difficult times. Revenue has declined for four years in a row and the company has been forced to close stores; office supplies have become less necessary in the modern world, and competition from the online channel has become stiffer. Earnings per share at the company are down 37% over the past five years.

Over the course of that time, the company's quarterly dividend has grown by 20%, sitting at $0.12 today or a current yield of 4.3%, though it has remained flat since 2013. Based on net income, the company's payout ratio was 81% last year, indicating that it has little wiggle room to continue paying its dividend. On a free cash flow basis, the ratio is close to 50%, but free cash flow has declined for each of the last four years, falling by more than 50% during that time. While Staples' dividend isn't immediately in jeopardy, the company's business is shrinking, and over the next year or two, it's likely that the dividend will be cut or axed altogether unless the company can find a way to turn around its business.

2. Barnes & Noble (NYSE:BKS)
Like Staples, Barnes & Noble has the misfortune of occupying an industry that was ripe for disruption from e-commerce. The leading bookstore chain has been more tenacious than many expected, posting slight gains in comparable sales in recent quarters. However, the company still faces an uphill battle. 

The retailer just initiated a dividend last September, indicating confidence in the business, offering a quarterly payout of $0.15, or a 4.9% yield. On a net income basis, that easily exceeds the $0.20 per-share profit analysts are expecting this year. Over the past four quarters, the bookseller's free cash flow was just $30 million, less than the $45 million in dividends it's set to pay out this year. The company is taking steps to cut expenses to support the dividend, and with no debt, its balance sheet is strong enough to support the dividend over the near term -- but if the recovery falters, the dividend could come under pressure.

3. Stage Stores (NYSE:SSI)
Stage stores may offer the best dividend yield in retail at 7.7%, but like many lofty yields, that's a result of a recent tumble in the stock price rather than the strength of the dividend itself, as shares are down 70% from their 52-week high.

Like other struggling retailers, the department store chain has been forced to close stores as profits have fallen. Still, the company remains committed to its dividend, raising it by 7% last year to $0.15 a quarter.

The retailer has badly missed analyst estimates in each of its last three earnings reports, is projected to earn just $0.46 per share this year, less than its $0.60 dividend payout. On a cash basis, the company's prospects look worse, as its free cash flow was -$50 million last year.

Stage Stores has consistently seen comparable sales fall, and is projecting a decline of -1%to -3% for the current year as it closes 30 locations. With the business in retreat, it seems unlikely that the company will be able to sustain its dividend for much longer.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.