As an income investor, you’ve probably heard of the illustrious “Dividend Aristocrats.”

These 54 companies have continuously raised their dividends over the last 25 years or more.

And because dividend growth – not just yield – is critical for achieving outperformance, the Aristocrats are popular investments for income seekers.

But some of these regal companies may be hiding behind their spotless reputation.

Just a little digging reveals that several of these lauded stocks are teetering on the edge of losing their Aristocratic rank…

Indeed, just because a stock has raised its dividend for a quarter of a century doesn’t mean it’ll continue to do so forever.

Thus, it’s important to look at the financials of the 54 Aristocrats and identify which dividends may be in danger of a freeze… or even a cut.

First, let’s take a look at the dividend payout ratio. Anything above 80% should be a red flag for investors. Yet, four of the Dividend Aristocrats (excluding HCP, Inc. (HCP), which, as a real estate investment trust, is held to a different standard) are above this important threshold:

The chart above shows both the 2014 dividend payout ratio and the trailing 12-month payout ratio. The latter gives an idea of whether the company is moving toward a more or less sustainable dividend, as its most recent quarter is included.

Now, let’s take a closer look at these four companies to see whether their dividends are truly in danger.

• Sysco (SYY): With a trailing 12-month payout ratio of 80.9% – just slightly above our 80% threshold – Sysco is in the least danger of losing its title of Aristocrat. Still, the financial numbers aren’t encouraging. Both revenue growth and net income have declined every year since 2010, and free cash flow has been in decline for just about three years now. In order to continue increasing its dividend, Sysco will have to make some tweaks.

• Kimberly-Clark Corp (KMB): This company has a trailing 12-month dividend payout ratio of 86.9%. Though it’s not above 100%, which would be cause for immediate concern, KMB’s financials are still worrisome. First, revenue peaked back in 2013, and then declined 6.8% last year. Even more shocking, net income dropped over 28% from December 2013 to December 2014. To top it off, free cash flow has been in decline since 2012. All in all, these aren’t favorable trends for KMB.

• AbbVie (ABBV): Though AbbVie has only been around since 2013 – which would render it unfit to be a Dividend Aristocrat – it was spun off from Abbott Laboratories (ABT), which had been paying a dividend since 1983. Currently, AbbVie’s dividend payout ratio is well above 100%, which is alarming. What’s more, free cash flow has been in precipitous decline since 2012. In fact, ABBV’s trailing 12-month free cash flow is just 49% of 2012’s level. Similarly, net income plummeted 57% last year. If ABBV continues down this path, its future as a Dividend Aristocrat looks bleak.

• AT&T (T): Finally, we come to the Dividend Aristocrat with the highest payout ratio. AT&T’s trailing 12-month dividend payout ratio is a brutal 168.1%, more than double our payout threshold. That seems pretty damning… but not all of the financials are bad. For instance, its revenue growth has actually been increasing for over three years now. So, is the dividend in danger? The answer is, quite possibly. Consider the company’s free cash flow, which peaked at $19.7 billion in 2012, but has since declined a whopping 49.7%. If AT&T wants to continue raising its dividend, it’ll have to find a way to generate more cash flow going forward.

Bottom line: The Dividend Aristocrats represent the best of the best when it comes to consistent dividend growth… but it doesn’t mean they’re invulnerable.

Always be on the lookout for companies with excessively high dividend payout ratios. After all, you don’t want to get stuck with a company that ends up freezing or even slashing its dividend.

Good investing,

Chris Worthington