Years ago, Sara Lee ($18.35), the packaged food giant and maker of some of the country’s best-known consumer brands, had a catchy slogan: “Everybody doesn’t like something, but nobody doesn’t like Sara Lee.”

Sounds good, but it’s absolute fiction if you own the stock, which is down in three of the last four years and is trading just a shade above its 52-week low of $17.30.

If Josh Peters, an equities strategist at Morningstar, knows what he’s talking about, Sara Lee’s stockholders – stuckholders would be a better term – face an even stiffer case of financial heartburn. The reason: Sara Lee is one of a trio of companies with hefty dividend yields that he considers highly vulnerable to a reduction or omission, given income prospects that are suspect. And as investors well know, such actions inevitably lead to falling stock prices.

The other two companies posing dividend dangers are FairPoint Communications ($14.19), an operator of more than two dozen rural local exchange carriers that provide local and long-distance telephone service, and Lance, Inc. ($25.72), a maker of bakery products and snack foods.

Morningstar is well worth listening to on the subject of dividend risks. Since January 2005, it has flagged nine companies that subsequently cut or eliminated their payouts. They include ConAgra,Equity Office Properties,and Anally Mortgage, each of which, Mr. Peters observes, flunked the most basic test of the dividend: Is it safe? In all instances, as in the current ones, the com panies faced the same dilemma: deteriorating income prospects, which put their dividends at risk.

Sara Lee – which owns brands including Hanes, L’eggs, Playtex, Wonderbra, Kiwi shoe polish, and Endust furniture polish – pays a 4.2% annual dividend, which Mr. Peters sees as being in jeopardy, largely because of a planned divestiture of 40% of its sales, a move designed to allow Sara Lee to become a much more focused packaged-goods company.

The problem with the divestiture strategy, Mr. Peters says, is that by having a smaller, more focused portfolio, shortfalls in any of its categories are going to have a much larger impact on sales and earnings than in the past. “We doubt the firm will be able to generate the kind of growth and profitability management is projecting longer term,” he says. And with the company working on integrating its disparate network of divisional headquarters into just two locations (one in America and another in the Netherlands), the risk only increases, he says.

Capital allocation, Mr. Peters contends, has been a past problem for Sara Lee, from buying back inflated shares with borrowed cash to paying too much for acquisitions that add little to the firm’s operating profits. And in maintaining its current dividend while committing to repurchase $2 billion worth of stock and repay $1.5 billion of debt, Sara Lee, he argues, leaves little for margin in its cash flows. Indicative of this, he notes the firm’s corporate credit rating has already been downgraded.

Sara Lee, Mr. Peters argues, is clinging to a dividend predicated on having a much higher level of sales and profitability. But given the risks associated with the restructuring, he reiterates: “We think the dividend is at risk.”

The dividend policy of FairPoint, which offers an astronomical 11.4% payout, targets a payment of 80% of its free cash flow. However, increased expenses related to an ongoing transition to a new billing system have recently driven the dividend payout well above this level. In addition, Mr. Peters points out, the company does not have much of a cushion to support dividend payments if other unforeseen events hurt its cash flow. Yet another factor that could hurt Fair-Point’s ability to maintain its dividend is its exposure to regulated revenue,which is higher than its industry peers.

Lance, with a payout of 2.4%, is seen struggling to compete for market share with giant food companies in the branded snack food market. Mr. Peters is also not enthusiastic about is private label business,which faces fierce competition and sells to customers with substantial bargaining leverage. Considering its weak competitive position, Lance, Mr. Peters believes, will also have difficulty passing on any increases in the cost of raw materials and packaging.

Likewise, he notes, powerful customers like Wal-Mart, which accounts for about 18% of Lance’s revenues and much of its sales growth in recent years, also weigh on the bottom line. Wal-Mart, Mr. Peters observes, is well known for squeezing profit-killing concessions from suppliers and the loss of this customer would be crippling.

In a recent conference call, the chief executive of Lance, David Singer, took a noncommital stance with regard to the dividend, noting he didn’t have a perspective on whether it would be maintained and that it was not something on the table. Mr. Peters’s reaction: “This is not what we like to hear from a firm already struggling to cover its payout.”

The bottom line: What looks like dividend riches could take you to the dividend poorhouse.

dandordan@aol.com