When you're evaluating a dividend-paying stock, the absolute primary thought has to be the viability and sustainability of the dividend itself. Find a company for which neither rain, nor sleet, nor dark of night will keep that courier from delivering a 3% payment to your account every year.

How do you find a "safe" dividend? Look for companies whose operating earnings and cash flow can cover their annual payments at least two times over. It is possible, in the near term, to raise capital through debt or equity offerings to prop up dividends. However, most companies would not sustain this practice for more than a quarter or two.

Source: The Street

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