Crescent Point Energy Corp. (TSX:CPG)(NYSE:CPG) is well known for its monthly dividend, and for good reason. Before slashing its payout by 57% in August, Crescent Point was the highest-yielding stock on the S&P/TSX 60, and remarkably the company remains in second place today.

But this dividend is actually more of a curse than a blessing. We take a look at why below.

Sucking up cash

Crescent Point finished 2014 as one of the energy patch’s strongest players. Its net debt of $3.2 billion equaled just over 25% of the company’s market value, and the company had some very efficient assets as well. Tellingly, the company didn’t have to cut its dividend, unlike many of its peers.

But as the oil slump persisted, Crescent Point’s dividend became a much bigger burden. In the first quarter of this year, the company raised over $500 million in new debt to cover the payout. Then in the second quarter, the company issued over $600 million in new shares to cover the dividend and an acquisition.

This has all left Crescent Point in a much worse position. Its net debt now stands at roughly $4 billion, nearly 50% of the company’s market value. Its share count is up by 11% since the beginning of the year. And the company’s share price has fallen by about 40%.

A lost opportunity

As the oil slump persists, weaker players will have to sell assets for whatever price they can get. Some struggling companies will simply get bought outright. This is great news for the stronger producers, because they can snap up properties for a bargain price.

Crescent Point could have been one of these companies. But instead it spent hundreds of millions of dollars on its dividend. Granted, it did make one big acquisition in the second quarter, but more would be possible were it not for that payout.

Even after slashing the dividend, Crescent Point will still have to pay $150 million to shareholders. This is equivalent to roughly 100% of future cash flow, according to CEO Scott Saxberg (and even this scenario assumes further cost cuts). So, the company will have no money left to snap up cheap assets.

What does the future hold?

Crescent Point would do well at this point to eliminate its dividend and use the money to expand. But this would anger too many shareholders. Instead, the company will continue paying its $0.10 monthly dividend, all while hoping for an eventual recovery.

This is not something you should want to be a part of. If you’re looking to make an oil bet, you’re better off with a non-dividend-paying stock. And if you’re looking for a big, stable dividend, your best bet is outside the energy sector altogether.

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Fool contributor Benjamin Sinclair has no position in any stocks mentioned.