Dividend investing is a tried-and-true strategy for generating strong, steady returns in economies both good and bad. But as corporate America's slew of dividend cuts and suspensions over the past few years has demonstrated, it's not enough simply to buy a high yield. You also need to make sure those payouts are sustainable.

Let's examine how International Paper (NYSE: IP) stacks up in four critical areas to determine whether it's a dividend dynamo or a disaster in the making.

1. Yield
First and foremost, dividend investors like a large yield. But if a yield gets too high, it may reflect investors' doubts about the payout's sustainability. If investors had confidence in the stock, they'd be buying it, driving up the share price and shrinking the yield.

International Paper yields 3.8% -- moderate, but not necessarily cause for alarm.

2. Payout ratio
The payout ratio might be the most important metric for judging dividend sustainability. It compares the amount of money a company pays out in dividends to the amount it generates. A ratio that's too high -- say, greater than 80% of earnings -- indicates that the company may be stretching to make payouts it can't afford.

International Paper's payout ratio is a conservative 21%.

3. Balance sheet
The best dividend payers have the financial fortitude to fund growth and respond to whatever the economy and competitors throw at them. The interest coverage ratio indicates whether a company is having trouble meeting its interest payments -- any ratio less than five is a warning sign. Meanwhile, the debt-to-equity ratio is a good measure of a company's total debt burden.

Let's examine how International Paper stacks up next to its peers:

Company

Debt-to-Equity Ratio

Interest Coverage Ratio

International Paper Co.

113%

        3

MeadWestvaco (NYSE: MWV)

60%

        3

Domtar (NYSE: UFS)

26%

        8

Sonoco Products (NYSE: SON)

49%

       10

Source: Capital IQ, a division of Standard & Poor's.

International Paper appears considerably more leveraged than its peers.

4. Growth
A large dividend is nice; a large growing dividend is even better. To support a growing dividend, we also want to see earnings growth.

Over the past three years, International Paper has grown earnings per share by 6% annually and has shrunk its dividend at a rate of 18%.

The Foolish bottom line
The company has a strong payout ratio, so a key factor for dividend investors to watch with International Paper is its leverage. The company has done a good job reducing it in recent years, partly at the expense of its dividend, and it'll be important to see the two ratios (particularly the interest coverage ratio) decline further.

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Ilan Moscovitz doesn't own shares of any company mentioned. You can follow him on Twitter @TMFDada. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.