After a few weeks of looking at the benefits of reinvesting dividends, a potential dividend disaster in the making at ConAgra (NYSE:CAG), and how dividends fare in comparison to repurchases, I've been looking forward to spending some quality time hunting around for a solid dividend payer.

Besides reading news, journals, and other periodicals, I like to use screens to find investments. While I have a few detailed screens that I like to run regularly, they have been coming up empty lately, so I occasionally make my screening criteria fairly broad or reverse some of them. From there, it's a largely manual scrub of the company's financials and annual report.

This isn't a simple strategy, but it can help an investor locate a solid company before the benefits of a turnaround have hit the income statement and captured the attention of the masses. Subscribers to our Income Investor service have seen this with Mathew Emmert's selection of ServiceMaster (NYSE:SVM) and enjoyed returns that beat the S&P by 10 percentage points.

The good
Using this process, I've been taking a look at Packaging Corp. of America (NYSE:PKG), which, though not a turnaround, is a company that regularly generates a fair amount of cash flow and is in the unloved paper products industry. More importantly, Packaging Corp. carries a near 5% yield, while its competitors Georgia-Pacific (NYSE:GP) and International Paper (NYSE:IP) sport yields under 3.5%.

The company also boasts a double-digit return on equity and return on assets of just over 5%. These measures put it ahead of its competitors in terms of return on equity and on par with Georgia-Pacific in terms of return on assets.

The not-so-good
Packaging Corp. introduced its dividend in 2004. While it is a strong dividend, there hasn't been enough time to judge the company's commitment to it. However, what's more worrisome is that since the dividend has been instituted, the company has not generated enough free cash flow to fund the dividend as well as its acquisitions. Granted, the dividend has been in place for only a year and a half, so there is plenty of time for this pattern to reverse itself before the company feels any cash cramps. Before jumping in, however, I'd like to see a period of sustainable free cash flow that exceeds the cost of the dividend and acquisitions.

For an investing strategy focused on dividends and income to consistently work, the dividends you receive must be reliable. Package Corp. may prove in time that its free cash flow is ample enough to fund a dividend as dependable as those issued by Procter & Gamble (NYSE:PG) or Hasbro (NYSE:HAS). For now, though, I'm simply not sure that's the case.

Foolish final thoughts
So, unfortunately, Packaging Corp. doesn't yet make the grade. It's disappointing from an investor's standpoint, because its strong operating cash flow and 5% dividend are attractive. But as a stock picker, you eventually become accustomed to passing over many more companies than you choose to invest in. I'll keep Packaging Corp. on my list of companies to follow to see how the business performs going forward and whether its acquisitions pay off with stronger free cash flow to support an ongoing dividend.

If you're interested in learning more about companies that generate robust free cash flow and pay you to hold them, consider a free 30-day trial to Motley Fool Income Investor. Over the past two years, lead analyst Mathew Emmert has delivered an average total return of 15.1% against the S&P 500's 8.6%. With your free trial, you'll get access to back issues and access to our community, where like-minded investors discuss picks and investing ideas. There's no obligation to buy if you aren't completely happy.

Nathan Parmelee had no financial interest in any of the companies mentioned at the time of publication. You can view his profile here. The Motley Fool has an ironclad disclosure policy.