As investors, we want to earn the highest possible return. However, the uncertainty of today's environment really makes it difficult to forecast future returns. We can earn our keep by focusing on dividends, which pay us cash in regular installments, and don't leave us at the mercy of Mr. Market's mood swings.

CenturyLink (NYSE: CTL) pays a juicy 7.8% dividend, which ensures multiple repeat appearances on dividend investors' radars. Let's take a look at some of this company's recent moves and see whether its dividend looks sustainable going forward.

Making big moves
In April, CenturyLink merged with Qwest Communications to create the third-largest telecommunications company in the United States, after AT&T (NYSE: T) and Verizon Communications (NYSE: VZ). Excluding merger-related costs, the transaction is expected to be immediately accretive to free cash flow per share, to the tune of $625 million annually over the next three to five years.

Last month, CenturyLink also completed its merger with Savvis. This enhances CenturyLink's managed hosting and cloud services, a hot sector that growing at 20% per year.

What have you done for me lately?
The merger with Qwest Communications notably followed six straight quarterly declines in revenue. As noted earlier, the merger is expected to immediately boost free cash flow per share. What's more, the combined entity is expected to have a payout ratio of just less than 50%.

This move to consolidate reminds me of Frontier Communications (NYSE: FTR), which had seen revenue decline for 10 straight quarters before acquiring Verizon Communications' wireline business in 14 states.

Now that we've reviewed recent events, let's see how CenturyLink stacks up compared to some of its peers:

Company

Revenue (LTM)

P/E (LTM)

Dividend Yield

CenturyLink $6,937 12.5 7.8%
BCE (NYSE: BCE) $18,102 14.0 5.7%
Telefonica (NYSE: TEF) $64,207 6.9 11.3%
Windstream Corporation (Nasdaq: WIN) $3,887 22.9 8.2%

Source: Capital IQ, a division of Standard & Poor's. All dollar amounts in millions.

CenturyLink trades at a decent multiple of trailing earnings and pays a respectable dividend. It's important to note is that the recent mergers have changed the picture going forward. If Qwest had been a part of the combined entity for all of 2010, CenturyLink's revenue in 2010 would have been $18.6 billion, a big step up from the $7 billion for the last 12 months quoted above.

Foolish bottom line
With its high dividend payout, CenturyLink will continue to draw investors' attention. The yield appears sustainable for the short term, but there are things to watch, such as the successful integration of the enormous Qwest Telecommunications. The addition of Savvis is an exciting move into a growing space as well. Only time will tell whether these moves will pay off, but the company appears to be on the right track.

Interested in CenturyLink? Add it to your Foolish watchlist.