How can you tell a good dividend stock from a bad dividend stock? Fool analyst Todd Wenning recently created a proprietary dividend "report card" here on Fool.com, which gives a letter grade to each company's dividend.

The three questions that Todd thinks are most important to answer are:

  1. Over time, has this company steadily increased its payouts?
  2. How sustainable is the dividend?
  3. Does the company have room to further increase the dividend?

Three stocks that have received an "A" or "A+" on the dividend report card are Deere (NYSE: DE) (report), Microsoft (Nasdaq: MSFT) (report), and Procter & Gamble (NYSE: PG) (report). Todd thinks each of these companies has a strong balance sheet and generates plenty of free cash flow to not only sustain the current dividend, but increase it in the coming years.

Watch the video here:

For more analysis, visit FoolTV.com.