Dividend stocks are everywhere, but many just downright stink. In some cases, the business model is in serious jeopardy, or the dividend itself isn't sustainable. In others, the dividend is so low it's not even worth the paper your dividend check is printed on. A solid dividend strikes the right balance of growth, value, and sustainability.

Today, and one day each week for the rest of the year, we're going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn't to say these stocks don't share the same macro risks that other companies have, but they are a step above your common grade of dividend stock. Here is last week's selection.

This week, I want to jump to a sector that rarely gets any attention from income investors: diagnostic equipment. There I'd like to highlight small-cap dividend extraordinaire Meridian Bioscience (Nasdaq: VIVO).

A growth story
Meridian Bioscience is a life-sciences company that manufactures diagnostic testing kits to detect gastrointestinal, viral, foodborne, respiratory, and parasitic infectious diseases. Considering the demand for diagnostic test equipment should be rising in accordance with the population, you're probably wondering why Meridian's stock is down in the dumps.

The reason is that its stock price is still trying to recover from an earnings warning last July. The company lowered its full-year forecast by a midpoint range of about 3%, yet its stock got whacked. Currency translation losses and a lack of organic growth when acquisitions were stripped out were the primary factors that drove earnings below expectations. But there's plenty of reason to be optimistic about Meridian's future beyond just the fact that demand should improve as the population increases.

Since reporting those weaker earnings in July, its growth situation has drastically improved. In the company's most recent quarter, Meridian reported a 16% rise in sales that was headlined by a 30% increase in its life-sciences segment and a 12% boost in its U.S. diagnostic segment.

For the U.S. diagnostic segment, H. Pylori testing kit revenue rose 23% while C. Difficile tests, a product that I think has enormous potential, grew sales by 28%. For the life-sciences division, it's the introduction of the new illumigene GBS testing system, which uses a patient's DNA to test for streptococcus group B infections, that has investors excited. Although the product was just introduced, management is pleased with sales thus far. Even the European diagnostic segment managed to eke out 8% revenue growth despite that region's weakness.

A true dividend diva
To really appreciate Meridian, let's take a closer look at how it stacks up next to its peers.

Sources: Morningstar, Dividata, author's calculations. CAGR = compound annual growth rate. Data current as of 5/11/2012.
*Thermo Fisher paid no dividend between 2002 and 2011.

I'm sorry for the data overload, but I believe it's important to truly get an appreciation for Meridian's impressive dividend. As you can see from these metrics, every other competitor trades at a "cheaper" valuation on paper based on P/E, cash flow, and book value. It should also be noted that Meridian's peers are also much larger and have significantly more diversified product lines, which also result in slower growth rates. Based on analysts' revenue-growth estimates found at Yahoo! Finance, Becton, Abbott, Thermo Fisher, and Siemens are projected to produce 2%, 3%, 6%, and flat revenue growth in 2012. Meridian, by contrast, is forecasted to grow sales by 15% this year.

But it isn't just that Meridian offers a much quicker growth rate -- it's also about doing right by its shareholders. Don't get me wrong: I appreciate a company that repurchases its stock because its thinks its shares are undervalued, but I'd much prefer a solid dividend instead -- and that's exactly what you'll get from Meridian.

Source: Dividata.
*Estimated 2012 payout based on $0.19 quarterly dividend.

Meridian Bioscience's dividend growth, while stymied since 2010, has still outpaced its peers. And the dividend did grow by a lot in the midst of the worst recession in 70 years. I think this goes to show just how strong the demand will be for diagnostic testing kits in the future regardless of the state of the global economy.

Another key aspect to Meridian's success is its prudent fiscal management -- something that's actually quite common among all of the companies profiled in this series. Meridian ended its most recent quarter with $24.3 million in cash with no debt. In fact, the last time Meridian carried any debt on its balance sheet was in 2006. This leaves the company time to focus on what's most important: taking care of its shareholders.

Meridian's policy of paying out between 75% and 85% of its fiscal earnings has resulted in a very strong dividend yield of 3.8%, which trounces its peers. Best of all, there's plenty of room for improvement in product growth, and after its latest report, Executive Chairman of the Board William Motto was quoted as saying that "we are comfortable with our cash dividend rate and the sales and earnings guidance."

Foolish roundup
Meridian Bioscience isn't large, and you will have to deal with the occasional hiccup in its product growth -- more so than you'd get by owning one of the larger names in this sector -- but it also offers one of the fastest growth rates in a high-demand industry and, most importantly, has a shareholder-first dividend policy. This is a company investors should be able to trust for a long time.

If you're craving even more dividend ideas, I invite you to download a copy of our latest special report, "Secure Your Future With 9 Rock-Solid Dividend Stocks," which is loaded with income-producing companies hand-selected by our top analysts. Best of all, this report is free, so don't miss out!