How far are you willing to go for a 7.5% yield? That's what prospective New Frontier Media (NASDAQ:NOOF) investors need to ask themselves, after Wednesday's drop in the stock price leaves the company with a payout that may be too generous to ignore.

Yes, New Frontier is a purveyor of porn. Even if it's the watered-down kind of skin flicks that you find on satellite television and pay-per-view cable late at night, it's still offensive to a lot of investors.

Plenty of sin stocks come padded with fat quarterly distributions, but most investors can't simply line up their tolerances against the size of the prospective dividend.

Sin

Yield

Reynolds American (NYSE:RAI)

Tobacco

5.3%

Altria (NYSE:MO)

Tobacco

4.0%

Anheuser-Busch (NYSE:BUD)

Alcohol

2.6%

New Frontier Media

Porn

7.5%

Fundamentals have to matter, too. That is where New Frontier's eye-catching yield begins to disrobe, and it's not pretty. The company's shares fell 15% on Wednesday -- propping up the yield from 6.1% to 7.5% -- after it reported crummy results.

Revenue fell 20% to $12.9 million in the company's fiscal Q1 2008. Earnings fell to $0.06 per share after the company turned a profit of $0.15 a share a year earlier. There was weakness in all three of the company's segments: Pay TV, film production, and Internet.

New Frontier's programming may reach a potential audience of 139 million American homes, but rate-slashing cable and satellite television providers and cyberspace apathy are weighing heavy on the company.

Making matters worse, the dreary report came a day after softer smut peddler Playboy (NYSE:PLA) posted better-than-expected quarterly results. Playboy posted gains in areas where New Frontier proved deficient.

New Frontier knew that it had a sorry story to tell. How else could you explain a press release that lumped the quarterly report with the hiring of a new chief financial officer, then started off by tooting the horn of the new bean counter? New Frontier waited until the fourth paragraph to get into the fiscal nitty-gritty.

New Frontier's struggles pose a bigger quandary for investors who have no problem buying into the adult entertainment industry to chase the $0.125-per-share quarterly dividend. If the fundamentals continue to deteriorate, the payouts will likely follow suit.

So forget about checking your inhibitions at the door here. Buying a high-yielding stock for all of the wrong reasons would be the biggest investing sin of all.

For related clean Foolishness:

Playboy is a Rule Breakers pick. Find out what other cutting-edge picks the growth stock newsletter recommends with a free 30-day trial offer. Anheuser-Busch is an Inside Value recommendation. For more about top dividend-paying stocks, there's also a free trial to Income Investor.

Longtime Fool contributor Rick Munarriz invests with a moral compass, even if it breaks down from time to time. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy has nothing to hide.