As the carnage in the energy sector continues, the butcher's bill of dividend casualties is starting to grow.

Back in March, I explained how Seadrill (SDRL) had the weakest financial position of all the offshore drillers. And in early November, I asserted that dividend cuts were coming. Now, we're already starting to see the “deluge” I warned about.

Seadrill and Trilogy Energy (TET.CO) have suspended their dividends altogether. Baytex Energy (BTE.TO) and Canadian Oil Sands (COS.TO) slashed their payouts by 58% and 43%, respectively.

income investors want to know where the next axe will fall. Well, I'm issuing a major warning for specific stocks across the energy sector.

The Cash Flow Deficit

One of the best ways to assess a dividend's sustainability is to examine the company's free cash flow (FCF), which is operating cash flow minus capital expenditures.

Unfortunately, a large percentage of the companies in the energy sector have low or even negative FCF due to the capital-intensive nature of the oil and gas industries. As a result, FCF is insufficient to cover dividend payouts in many cases. The company essentially has to issue debt or equity to finance the distribution.

By subtracting the total cash dividend distribution amount from FCF, we arrive at a cash flow surplus/deficit figure (let's focus solely on the companies with a deficit for this exercise).

Then, by standardizing this cash flow deficit – comparing it to the overall size of the company – we can attempt to quantitatively approximate the sustainability of the payout, based on the last four quarters of data.

Using this metric, I've compiled a list of companies with exceptionally low dividend payout sustainability. You've heard of return on assets (ROA) as a profitability measure… Well, think of this new metric as shortfall on assets (SOA).