High yield dividend stocks are in favor with income oriented retirement investors right now. But what happens when your high yield dividend investment actually ends up losing more of your retirement money than it protects? That is the sad reality for many dividend stocks in 2010 despite their high yields and investor perceptions that these investments are low-risk, conservative plays.

Simple investing strategies often works best in a difficult market, so here’s an investing adage that’s worth remembering when picking dividend stocks — “don’t throw good money after bad.” If you’re losing a significant amount of money as the share prices of your dividend stocks dive, then it may be time to pull the trigger. After all there are a host of high-yield stocks out there, so why should you settle for one that offsets your quarterly dividends with regular losses in share price?

To help you identify which dividend losers you should cut loose, here are seven high yield dividend stocks that just aren’t worth holding on to right now:

Dividend Dud #1 – Pfizer (PFE)

Drugmaker Pfizer (PFE) is fairly popular among dividend stock investors, considering its nearly 5% yield and a market cap of about $116 billion. Sounds like a conservative stock that’s sure to protect your portfolio, right?

Well think again. Pfizer shares are off about -20% this year as costs of last year’s Wyeth merger continue to weigh on its bottom line. On top of that, looming patent expirations on blockbusters like Viagra and Lipitor cast doubt on the long-term futures of PFE stock. Yes, the company just paid an 18 cent dividend in May, but that’s small recompense for the loss in share value — and the threat of continued declines are enough to give investors pause.

Dividend Dud #2 – Banco Santander (STD)

Banco Santander (STD) is a financial group operating principally in Spain, Portugal and other European countries with a market cap of nearly $90 billion. This dividend stock has a high yield of around 5% right now — and with an ex-dividend date of  July 28 there’s still time to get a piece of the next quarterly payout.

However, the cash payday will be little consolation if the stock continues to tank the way it has so far in 2010. Year-to-date, STD stock has lost a stunning -34% thanks to euro zone debt fears and particular financial problems in Spain due to a meltdown in the housing and construction markets. The dividend on this stock is nice, but it hasn’t offset its losses so far in 2010.

Dividend Dud #3 – FirstEnergy (FE)

Utility stocks are mainstays of dividend investors because they are low risk and provide a reliable source of income. But FirstEnergy Corp. (FE) has been quite volatile in 2010 and is far from a conservative utility play.

FE stock has lost -22% so far in 2010 — which more than offsets the benefits of the stock’s 6.1% dividend yield. Put another way — FE paid a quarterly dividend of 55 cents a share in May but has given up more than $10 a share in stock price in 2010. That’s not exactly a good way to protect your retirement money. FirstEnergy has a market capitalization of more than $11 billion.

Dividend Dud #4 – Telefonica (TEF)

Telefonica (TEF) is very much in the same boat as Banco Santander. This telecom stock is giant with a market capitalization north of $88 billion and offers a dividend yield of around 6% annually. Unfortunately, TEF stock has flopped -30% in 2010 so far.

The telecommunications giant is the third largest broadband and telecom provider in the world, but that’s little consolation to shareholders who have watched this company’s share prices get gutted by the euro zone meltdown. Telefonica has operations in Latin America that have been showing strength, but the Madrid-based company is heavily reliant on European business right now and has been battered as a result.

Dividend Dud #5 – PPL Corp.  (PPL)

Another underperforming ute is PPL Corporation (PPL). The energy and utility holding company has a market cap of over $9 billion and has given up nearly -24% year-to-date. Through its subsidiaries, PPL generates electricity from power plants in the northeastern and western United States, markets wholesale or retail energy primarily in the northeastern and western portions of the United States and delivers electricity to approximately four million customers in Pennsylvania and the United Kingdom. PPL operates through three segments: Supply, Pennsylvania Delivery and International Delivery. PPL Energy Supply, LLC (PPL Energy Supply), an indirect wholly owned subsidiary of PPL, is an energy company engaged through its subsidiaries in the generation and marketing of power, primarily in the northeastern and western power markets of the United States and in the delivery of electricity in the United Kingdom. PPL Electric Utilities Corporation (PPL Electric) is a direct subsidiary of PPL and a regulated public utility.

Dividend Dud #6 – Lorillard (LO)

Tobacco giant Lorillard, Inc. (LO) boasts a 5.4% yield and just paid shareholders a hefty quarterly dividend of $1 on May 27. Too bad the cigarette manufacturer is off more than $10 a share since January, or nearly -10%. What’s more, the stock has added a mere +8% in the last 12 months — less than half the gains made by the broader market.

Not only does Lorillard’s dividend yield not make up for its poor performance in 2010, its sluggish share price in the last year should be more than enough proof to scare you off this tobacco company. LO has a market cap of around $11 billion.

Dividend Dud #7 – ProLogis (PLD)

ProLogis (PLD) is a real estate investment trust with a market cap of over $5 billion and thus would seem like a great dividend play. A REIT must distribute at least 90% of its taxable income to shareholders annually, guaranteeing a good incentive for hefty paydays. But this international real estate company isn’t your typical reit — it owns large swaths of land as part of its distribution and warehouse operations in North America, Europe and Asia. Not only have these markets seen big declines in 2010 as the real estate market has continued to suffer, the freight and warehousing business hasn’t been so hot as consumer spending remains tight.

PLD stock yields 5.6%, but has also lost about -23% so far this year. The company just paid a 15 cent dividend in May but now may be a decent time to cut your losses and get out of ProLogis before further declines.

As of this writing, Jeff Reeves did not own a position in any of the stocks named here