For investors interested in dividends, United Online (NASDAQ:UNTD) has been popping up on screens of late because of its large yield. As of today's earnings release and subsequent jump in price, the shares still yield a beefy 6.35%.

The premise for investing in United Online is that the company's dial-up Internet business will remain viable longer than expected. The free cash flow generated from the dial-up business will allow the company to fund its large dividend, pay down its remaining debt, and diversify its business by adding other subscription services, such as its and a photo-sharing business. So far, it's pretty logical.

The current quarterly numbers, for the most part, bear that out -- revenues were up 19%. Net income and earnings per share were down versus last year due to larger tax expenses. Strip out the tax charge, and the earnings were flat. Overall, the company's online access business is losing subscribers, but its NetZero division continues to add customers -- a fact I'm sure Time Warner's (NYSE:TWX) AOL division isn't overlooking.

For investors interested in the yield -- and I would guess that most are -- I would recommend focusing on the cash flow statement more than on the income statement, and I would completely ignore the company's OIBDA (operating income before depreciation and amortization) figures, because they ignore the cost of capital expenditures, acquisitions, and taxes.

Walking down the cash flow statement, immediately I see that United Online is grouping its stock compensation expenses in with its depreciation and amortization expenses. This is not something I like to see, because the stock compensation expense is a different beast than depreciation and amortization, which are offset by capital expenditures in a free cash flow calculation. The most basic free cash flow calculation is operating income minus capital expenditures, but I also recommend that investors always subtract any benefits claimed by stock compensation expense from operating earnings.

In this quarter's report -- and I haven't looked at others -- the company provides a breakout of the depreciation, amortization, and stock compensation expenses elsewhere in its release. I recommend adding back the stock compensation expense to get a more accurate view of free cash flow, because that compensation expense will be paid by shareholders in the future. Doing this yields an operating cash flow of $37.8 million for the quarter, instead of the reported $40.7 million, and free cash flow of $32.8 million, instead of $35.7 million.

This adjustment still leaves the company with room to fund its $12.6 million dividend payment for the quarter, its debt repayments, and its capital expenditures -- and still have a little more than $14 million left. Glancing at the previous four quarters' yields, I see similar results.

But I do have concerns about United Online's dilution and its effect on dividends, as well as how committed the company is to maintaining and increasing its dividend. The other concern, and a topic for another day or another site, is the company's VoIP plans. The competition in this arena is not small, and Skype is already a strong brand name with a solid free product in this space. For these reasons, I'll take a pass for now.

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Nathan Parmelee has no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.